Bitcoin (BTC) price fell below $30,000 after almost a week. Among other macro factors, the downward trend in important on-chain data points such as BTC dominance and the balances held by long-term investors. Could BTC be in a minor correction?
After achieving 70% price growth in the first quarter, Bitcoin consolidated its recent rally to reach over $30,000 on April 10. With the global cryptocurrency market cap surging towards $1.26 trillion, it appears that investors are now looking beyond BTC as they grow more confident about the broader range. Cryptocurrency market.
BTC dominance takes a hit
Bitcoin Dominance (BTC.D) has fallen by 2 percentage points in the past week. BTC.D tracks the percentage of the total cryptocurrency market valuation, including the Bitcoin market cap.
The chart below shows how BTC.D fell sharply from 49% on April 12 to 47% as of April 17.
The decline in BTC dominance could signal a shift in market sentiment towards altcoins. As investors become more interested in altcoins, BTC often loses market share as they may sell some of their Bitcoin holdings to buy other cryptocurrencies. Ultimately, this may lead to a short-term drop in the Bitcoin price.
Likewise, the decrease in the balances held by long-term BTC holders also confirms the bearish hypothesis. According to IntoTheBlock, cryptocurrency investors who have held their assets for more than a year have started withdrawing their investments from BTC in recent weeks.
Between April 9th and April 17th, long-term HODLers (addresses that have held Bitcoin for more than a year) offloaded 300,000 BTC worth nearly $9 billion. Meanwhile, the stocks of short-term investors and speculative traders have increased by 17% in the past 30 days.
When long-term asset holders dump, and short-term traders gain more influence over the market, the asset may experience slow growth and high volatility.
Thus, long-term cryptocurrency investors can look towards digital currencies for diversification and higher return. So BTC may face a slight correction in the coming weeks.
BTC Price Prediction: Strong support at $28,300
According to IntoTheBlock’s In/Out of Money Chart (IOMAP), Bitcoin is unlikely to drop below $28,000 if the bears continue to influence temporarily. IOMAP data helps identify support and resistance areas by tracking the volume of currencies that are trading at different price levels.
As seen below, bears are likely to force a pullback, but the 405,000 addresses that bought BTC at an average of $29,300 will present some challenges.
But if this does not hold, $28,300 is a bigger support level. Here, the bullish army of 824,000 addresses holding 519,000 BTC will look to hold out.
The bulls could get more wind in their sails if bitcoin price surpasses the recent local high around $30,750. But the 1.3 million addresses containing 633,000 BTC could slow the rally as it looks to take profits.
However, if Bitcoin breaks that resistance, it could head towards the next important resistance at $33,000.
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 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.