Bitcoin (BTC): Should Investors Expect a Bullish Correction This Month?
The price of many crypto assets, in the last 30 days, registered bearish setbacks from the highs recorded in July. Additionally, aggressive comments made by Federal Reserve Chairman Jerome Powell on August 26 caused the market to plunge further, causing Bitcoin [BTC] and many other coins to end the month with price declines of two digits.
According to data from CoinGecko, the total market capitalization of cryptocurrencies fell by 6% in August. Although it is still far from its position 30 days ago, the market has seen some recovery in the last 24 hours.
Just before buying the dip
According to analyst Easy on Chain at Cryptoquant, there has been a steady decline in transactions processed on the BTC network. As a result of a drop in demand on the network, there has been a drop in the percentage of fees in total block rewards.
This analyst further stated that when the percentage of the fee on the block reward falls and remains below 3%, this could be an indication that the price of BTC is oversold.
Also, this may be an indication of a bearish cycle caused by low demand on the network.
With demand currently at an all-time low, the analyst concluded that “the new bull cycle is still far away” for BTC.
For any upward correction to occur, the analyst opined that,
“We should wait until the fee percentage on the total block reward manages to stay above 3%, which would indicate new demand on the network.”
Furthermore, another analyst, Tariq Dabil, claimed that the bearish run was far from over as active addresses on the BTC network remained in the neutral zone. According to Dabil,
"Active Addresses is still in neutral territory, where this is a relief from fears of a looming dump and also a sign that the bull run still needs time to arrive."
A look at the average dollar investment age (MDIA) of BTC on Santiment confirmed the opinions mentioned above. In the last six months, the BTC MDIA is up 41%.
According to the analytics platform, if there is an extended period (months at a time) in an asset's MDIA, this generally implies that there is a worrying stalemate in that coin's network. In this case, the asset price might have a hard time seeing growth.
According to Bloomberg, September has historically been one of the worst for BTC, as the token price “has averaged an 8.5% drop over the month over the last five years". Investors therefore need to be aware of this.
Sep 02, 2022