A CryptoQuant Analyst Believes A Bitcoin Dump Could Be Easily Triggered.
Bitcoin is vulnerable to a price dump as velocity declines.
In a CryptoQuant Quicktake released on Monday, CryptoQuant analyst MAC.D cautioned that a small price shock could trigger a market dump due to increased inactivity of institutions and whales.
“… because the Fund and the whales have less movement, it seems that even a small price shock may cause dumping,” wrote MAC.D.
BTC Velocity has been decreasing.
"In conclusion, because the Fund and the whales have less movement, it seems that even a small price shock may cause dumping."
— CryptoQuant.com (@cryptoquant_com) September 26, 2022
It bears mentioning that MAC.D’s analysis focuses on the decline in Bitcoin’s velocity, which is the result of dividing the total number of coins moved in a year by the supply and indicates the speed of Bitcoin distribution in the market. Notably, according to MAC.D, Bitcoin’s volatility has been on the decline since June, indicating reduced transactions.
Meanwhile, the asset remains under significant selling pressure due to worrying macroeconomic factors that have led to multiple interest rate hikes by the Fed. As reported by The Crypto Basic last Friday, Bitcoin’s funding rates remain negative, and inflow to exchanges has spiked.
Santiment data showed that the week before, a whopping 1.65 million BTC had found their way to exchanges in only a few days. Additionally, as reported on Monday, Bitcoin whale addresses have plummeted to 29-month lows. However, small investors appear to accumulate as wallet addresses over 1 BTC have reached 900,000.
Bitcoin is trading at the $20,226.01 price point at press time. It is up 7.97% in the last 24 hours.
However, it bears mentioning that analysts still believe that the asset price can go lower. For example, seasoned price action trader Justin Bennett says the asset is in a descending triangle price pattern and may be about to fall to a price range between $5k and $12k, warning investors to expect lower prices later this year.
Since late May, $BTC has formed a descending triangle.
The objective of this pattern is $5k. Yes, that.
This is probably a worst-case scenario for #Bitcoin, and $12k comes before this. But don't rule it out.
— Justin Bennett (@JustinBennettFX) September 16, 2022
Galaxy Digital CEO Mike Novogratz expects Bitcoin to get a break from its lackluster price performances over the last 10 months when the Fed starts economic easing.