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6 reasons for the rising yen

The recent decline and subsequent recovery shows the resilience of Bitcoin prices in the face of market volatility. Key metrics and trends may provide insights into the Bitcoin price today and where it is headed.

Looking at on-chain data, derivative indicators, and the role of leverage in the cryptocurrency market can help traders make informed decisions about the Bitcoin price today and its future.

Bitcoin price today: support at the 50-day simple moving average

In the past week, Bitcoin experienced a short pullback but found strong support around a critical moving average. After breaking the $25,000 mark, it is necessary to watch the pullback to assess the remaining buying power.

In this case, buyers were quick to step in at the 50-day SMA, which indicates bullish momentum. However, the range between $30k and $31k has proven to be a strong resistance area for bitcoin price today, which indicates the possibility of further consolidation.

Bitcoin price in US dollars. source: TradingView

Next Federal Open Market Committee meeting It could affect Bitcoin’s current strength, as policy decisions could influence market sentiment.

On-chain indications: Variation based on cost and long-term carrier supply

The increasing divergence between the short-term and long-term bearer cost basis is a historically accurate sign that the worst of the bear market is behind. The cost basis for short-term owners rose to $24,000, while the long-term cost basis fell to just under $21,000.

This divergence indicates that the cost basis for short-term holders is now acting as support for the Bitcoin price today.

cost basis
Bitcoin cost basis. source: glass

Although this level had only been tested once during the current recovery phase, it had successfully held up.

The decline in the long-term holder cost basis can be attributed to the entities that bought Bitcoin cheaply after the FTX crash, and which are now aging in the pool of long-term holders.

Derivatives Markets: Leverage and Volatility

Leverage played an important role in this week’s market volatility. In fact, the sharp drop in open interest and the sharp rise in total liquidation in futures clearly indicate this.

The cryptocurrency market is open interest
Open interest on bitcoin. source: CryptoQuant

Interestingly, the open interest continued to decline even as the price of Bitcoin rose from $27,000 to $30,000. Thus, it indicates that the rebound may be driven by the spot trade.

Tightening supply and growing demand

In the bigger picture, Bitcoin supply continues to shrink, with 54% of the supply remaining unchanged for two years or more. This waiting pattern demonstrates long-term conviction in the face of market volatility.

Bitcoin price today
Show bitcoin latest activity. source: glass

In addition, new addresses are being created at a near-historic pace, which indicates a growing demand for the bitcoin price today.

New BTC addresses
New BTC addresses. source: IntoTheBlock

The combination of supply tightening and increased demand for the chain is setting the stage for a potential price hike in the medium and long term.

Leverage Reduction: A trend toward stabilization

The main hurdle for Bitcoin in the short term is the volatility caused by leverage. However, the overall trend shows a decrease in market leverage, which may make periods of volatility less impactful.

Bitcoin open interest to market capitalization ratio
Bitcoin open interest to market capitalization ratio. source: IntoTheBlock

Metrics such as open interest relative to market cap and percentage of BTC margin futures can help gauge leverage and risk appetite in the market.

Both of these metrics are on a downward trajectory, indicating a potential shift toward more stable market conditions.

Bitcoin future prospects

Bitcoin’s resilience amid market volatility and its ability to recover from short-term pullbacks demonstrates its fundamental strength. As leverage continues to drop and on-chain demand grows, BTC may be preparing for a potential price rally.

Traders should closely monitor key metrics and trends to make informed decisions about Bitcoin’s future prospects.

Disclaimer

In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to providing accurate and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions.

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