Bitcoin (BTC) has faced challenges in the last couple of months, but this is not unusual. Surpassing the psychological level of $100,000 was a tough hurdle. Even when it seemed like the bulls had successfully turned it into support, the bears managed to push the price down.
As per a post on X (formerly Twitter), the decline in BTC’s value in January following the halving has typically been a recurring theme. If history repeats itself, Bitcoin could be trading around $130,000 by March.
Besides studying past price movements, analyzing the flow of BTC to and from centralized exchanges provides valuable insights into market dynamics. Short-term holders recently entered a distribution phase, but their selling pressure is expected to diminish, potentially supporting Bitcoin’s recovery on the charts.
Positive Signals from Price Movements and Exchange Trends for Bitcoin
The 30-day moving average of Bitcoin inflows into exchanges has significantly dropped since peaking in early December. This decline has brought the 30-day moving average to levels last seen in October and June 2024.
In June, BTC was hovering around the $60,000 range during a downward channel formation. Although it broke out of this pattern in October, it was still facing resistance around $70,000. The decrease in inflows while Bitcoin consolidated below $100,000 indicates a bullish trend.
The netflows, representing the variance between inflows and outflows, have also been on a downward trajectory. The 30-day moving average has predominantly been negative since March 2024, with a brief period of positive flows in the second week of May.
A comparison of recent flow trends with past cycles reveals a prolonged period of negative netflows that was unprecedented. While negative netflows were observed from late August to the final week of November in 2020, the last eleven months have seen a far more significant negative trend than in previous cycles.
Consequently, it suggests that there is stronger bullish sentiment surrounding Bitcoin this time around.
Though it may not result in equally substantial price surges, it is highly probable that long-term holders will react with less panic and in fewer numbers during sharp pullbacks. This could potentially mitigate the traditional volatility and significant price drops associated with a Bitcoin bull market.