Bitcoin Drops Below All-Time High of 2017, But Could Sellers Be Exhausted?

Written by Marcos Sotero, Analyst The UK Digital Asset Broker GlobalBlock

Bitcoin fell over the weekend without reaching ATH in 2017, at around $19,600. Coinglass, a trading and information platform, shows that there have been liquidations of $600 million, as the price of Bitcoin plummeted to nearly $17,600. Bitcoin has suffered about $300 million in liquidation while Ethereum holds $200 million.

Despite this bearish price action, Bitcoin closed the week solidly above $20,000, and some on-chain metrics suggest an overall bottom or a temporary bottom may be near.

Why are so many altcoins showing their strength against Bitcoin and Ethereum?

We’re not seeing a similar streak in altcoin divestitures relatively, and they have generally shown strength over the past week or so. This is because Bitcoin and Ethereum are the primary uses of collateral for leveraged trades, and the fact that we can see different liquidation prices in the chain means that low scaling can be premeditated. I also think that one of the main reasons why there has been no buying pressure on Bitcoin and Ethereum over the past two weeks is that major buyers can see other people’s liquidation levels.

What do on-chain metrics suggest about the recent pullback?

in Glassnode On-chain analysis shows that the liquidation streak over the weekend led to the largest realized dollar-denominated loss in Bitcoin history. There were more than $7.325 billion in bitcoin losses that were booked by investors, and nearly 555,000 bitcoins traded between $18,000 and $23,000. Investors holding one-year-old coins gave in as data from Glassnode shows a higher impulse for “active return supply of more than 1 year BTC”.

Finally, when Bitcoin bottomed at $17,600, only 49% of the profits were in supply. We can see in this chart from Glassnode that historical bear markets have pulled back and consolidated with between 40% and 50% of supply in earnings.

Based on historical data, all of these indicators indicate that Bitcoin has either reached a temporary bottom or is in the process of reaching a bottom in a bear market. It is important to note when looking at this historical data, that Bitcoin has not gone through a period of continuous inflation. We may be close to the bottom of a generation with more forced liquidations taking place, but we can’t be confident that the uptrend will continue until inflation convincingly slows.

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