Bitcoin price is flat at spot rates. However, one analyst thinks the BTC price needs to drop hard for demand to build up in the near term
Bitcoin and most altcoins remain in a tight range when writing on August 21.
However, considering Bitcoin’s market share, which currently stands above 55%, according to CoinMarketCap, analysts are keen to see how it performs.
Historically, now that BTC and altcoins are mostly positively correlated, whenever the world’s most valuable coin rallies, Ethereum, Cardano, Solana, and even meme coins tend to fly.
Periodic reminder.
You can't keep the ball underwater forever.
MtGox returning 140k BTC, German govt selling 50k BTC, US govt selling 10k BTC, miners forced to sell BTC after the halving … that's all done now. pic.twitter.com/1Qo6i9HzfD— PlanB (@100trillionUSD) August 20, 2024
Bitcoin Price is Struggling – Here’s What Could Happen Next
Bitcoin price seems to be struggling and under immense selling pressure after the sell-off in early August.
Despite bulls’ attempts to push prices higher, as seen on August 8, the coin is back in a tight range, consolidating, and without “real demand.”
(BTCUSDT)
Technically, Bitcoin needs to clear immediate local resistance levels, a move that might reinvigorate demand and prop up optimistic buyers.
A leg above $63,000 will likely open up demand, allowing Bitcoin to float to June and July 2024 highs at $72,000.
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Do Prices Have To Drop For BTC To Rally?
Though price gains are welcomed, one analyst on X thinks Bitcoin needs to first drop before developing momentum to push higher.
In a post on X, citing on-chain developments, he said when prices crashed to around $50,000 in early August, there was a massive change in the volume of transferred coins.
(Source)
According to his estimation, it rose by 7%. This is the largest expansion since the beginning of the bull cycle, which dates back nearly a year.
He said that the surge in transaction volume suggests that as prices drop, more market players are willing to buy.
Of note, this development aligns with the concept of negative price elasticity of demand.
(Source)
The analyst continued that any unexpected price increase leads to low demand, as shown by the number of volume transfers.
Conversely, whenever prices sharply decline, market participants tend to flock in, buying at a perceived discount.
For holders, the dilemma is whether price drops will trigger demand. This is especially true considering the role of $50,000 as an anchor and a psychological price level.
If there is panic selling, Bitcoin may crash to retest $50,000. However, whether prices will recover from this point depends on market forces. It will also depend on whether most players think the coin is being traded at a discount.
BTC Price Is Fragile: Speculators Are Back On The Market
Despite the high hopes, there are concerns that Bitcoin is fragile. One analyst notes that the open interest across leveraged platforms is up.
(Source)
As more users open up more positions using leverage, the uptick becomes more speculative and not based on real demand.
Historically, such leverage-driven leg-ups are often followed by sharp price reversals.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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