This week I am going to be looking at the damage done to Bitcoin's on-chain metrics, following its worrying drop to the $52,500 level.
I will also be looking at the technical damage done this week in order to answer the question, can Bitcoin rebound?
Firstly, let's take a look Sentiment surrounding Bitcoin.
According to Weighted Social Sentiment data we have not seen any major crash in sentiment, especially like we did when BTC crashed under $50,000 in August.
Source: Santiment.net
Sentiment towards BTC is currently negative for sure, but there is a lot of scope for sentiment to dip.
This doesn't conclusively confirm that Friday wasn't a major market low for Bitcoin. Sentiment towards Bitcoin next week can still crash even if the price doesn't.
Source: Santiment.net
Volume spikes are always a fantastic metric to identify potential major market bottom and tops.
BTC Volume was above average on Friday, but nowhere near the two biggest spikes in Volume this year (which coincided with major turning points).
Source: Santiment.net
The Supply of Bitcoin in Profit has also dipped to a new 2024 low. Not surprising given the amount of sold rallies since $66,000.
What is interesting to me is the yearly statistics for this metric. The 2023 low is 68% and the 2022 low is 48%. The obvious worry is an overshoot to 2022 levels next week.
Bitcoin ETF flows need a special mention. ETF outflows exceeded $1 billion this week. Extremely worrying.
BTC ETF buying might be the key ingredient for a price recovery, not to mention retail participation.
I could be wrong but ETF buyers may need a compelling narrative or price point (think sub $45,000 before bargain hunters arrive.
Source: Tradingview.com
Technically, Bitcoin is crushed below $54,500-$55,000 for various reasons.If the spillage continues next week and Bitcoin cracks $50,000 then it could get nastier than most imagine.
Bonafide trend-defining support comes in at $44,500, but the ultimate tests would be the yearly pivot close to $35,000 and last years breakout spot at $32,000.
Source: Babypips.com
Early week price stabilization above $55,000 could give the green light for $59,000. Which would be ideal, plus a higher monthly low would be created in this scenario.
Based on the on-chain and sentiment metrics (plus our own metrics which are bearish) I am seeing there is still a significant risk of more downside next week so be very careful if $50,000 support cracks.
