Bitcoin’s (BTC) price has been struggling since the anticipation of the approval of a spot Bitcoin exchange-traded fund (ETF). BTC reached the $38,000 region on January 23, then quickly retraced. Has the cryptocurrency’s price reached a local bottom at the $38,000 level?
Short-Term Support for Bitcoin
Cryptocurrency analytics firm CryptoQuant has released its weekly report. According to the report, there are various factors indicating that the Bitcoin price may have potentially hit the bottom. Last week, the BTC price fell to levels where short-term investors had made their purchases. The realized price is the average cost at which short-term holders acquired their Bitcoins. CryptoQuant commented on the matter:
During bear markets, the realized price acts as a ceiling and floor in bull markets.
As of January 31, the realized price is around $40,400, which could mean that this level may serve as good short-term support for the Bitcoin price. However, CryptoQuant had previously stated that when the unrealized loss margin of short-term holders is around 10%, the price typically bottoms out.
Whale Movements in BTC
Shared data shows the spent output profit ratio (SOPR) of short-term Bitcoin holders, which can indicate whether their investments are in profit or loss. When Bitcoin briefly reached $38,000 last week, many short-term investors sold their BTC at a loss.
The SOPR ratio fell to 0.98 last week, suggesting that wallets holding Bitcoin for less than 155 days sold their holdings at an approximate 2% loss. Whale investments in Bitcoin are rising towards levels last seen in December 2022. Additionally, data indicates that various ETFs are continuously increasing their BTC holdings, while selling pressure from the Grayscale Bitcoin ETF (GBTC) is decreasing. These factors could indicate increasing demand and decreasing supply, potentially positively affecting the Bitcoin price.
