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The recent pullback and subsequent recovery demonstrate BTC price resilience in the face of market fluctuations. Key metrics and trends may provide insights into the price of Bitcoin today and where it is heading.
Looking at on-chain data, derivative indicators, and the role of leverage in the cryptocurrency market can help traders make informed decisions about today’s Bitcoin price and its future.
Bitcoin Price Today: Support at the 50-Day SMA
Last week, Bitcoin experienced a short pullback but found strong support around a crucial moving average. After breaching the $25,000 mark, monitoring pullbacks to assess the remaining buying strength is essential.
In this instance, buyers were quick to step in at the 50-day SMA, signaling bullish momentum. However, the $30,000-$31,000 range has proven to be a strong resistance zone for Bitcoin price today, indicating the possibility of further consolidation.
Bitcoin US Dollar Price. Source: TradingView
The upcoming FOMC meeting could impact Bitcoin’s current strength, as the policy decision may influence market sentiment.
On-Chain Indicators: Cost Basis Divergence and Long-Term Holder Supply
A growing divergence between short-term and long-term holder cost basis is a historically accurate signal that the worst of the bear market is behind. The cost basis for short-term holders has risen to $24,000, while the long-term holder cost basis has dropped to just under $21,000.
This divergence suggests that the cost basis of short-term holders is now acting as support for today’s Bitcoin price.
Bitcoin Cost Basis. Source: Glassnode
Although this level has only been tested once during the current recovery phase, it held up successfully.
The decline in the long-term holder cost basis can be attributed to entities that bought Bitcoin cheaply after the FTX collapse, which are now aging into the long-term holder cohort.
Derivative Markets: Leverage and Volatility
Leverage played a significant role in this week’s market volatility. Indeed, the sharp drop in open interest and a spike in total futures liquidations clearly indicates that.
Bitcoin Open Interest. Source: CryptoQuant
Interestingly, open interest continued to decline even as Bitcoin’s price rebounded from $27,000 to $30,000. Thus, indicating that the bounce could have been driven by spot trading.
Tightening Supply and Growing Demand
In the bigger picture, Bitcoin’s supply continues to tighten, with 54% of its supply remaining unmoved for two or more years. This holding pattern demonstrates long-term conviction in the face of market fluctuations.
Bitcoin Supply Last Active. Source: Glassnode
Additionally, new addresses are being created at a near-historic pace, signaling growing demand for the Bitcoin price today.
New BTC Addresses. Source: IntoTheBlock
A combination of tightening supply and increasing on-chain demand sets the stage for potential price appreciation in the medium and long term.
Reducing Leverage: A Trend Towards Stability
The primary obstacle for Bitcoin in the short term is leverage-induced volatility. However, the overall trend shows a decline in market leverage, which may make periods of volatility less impactful.
Bitcoin Open Interest to Market Cap Ratio. Source: IntoTheBlock
Metrics such as open interest relative to market capitalization and the percentage of futures contracts margined with BTC can help gauge leverage and risk appetite in the market.
Both of these metrics are on a downward trajectory, indicating a possible shift towards more stable market conditions.
Bitcoin’s Future Prospects
Bitcoin’s resilience amid market fluctuations and its ability to recover from short-term pullbacks demonstrate its underlying strength. As leverage continues to decline and on-chain demand grows, BTC may prepare for potential price appreciation.
Traders should closely monitor key metrics and trends to make informed decisions about Bitcoin’s future prospects.