In spite of significant losses for BTC since mid of August, the “buy the dip” trend in the cryptocurrency markets is yet strong, as per the blockchain data.
While the BTC has declined from $12,500 to $10,000 and once even under $10K in the past 3 weeks, a growth in the number of “accumulation addresses” has been observed. The increase is by 2% to 513,000, as per the data source Glassnode.
“Lots of new daily buyers are coming in to absorb supply,” Su Zhu, CEO of Singapore-based Three Arrows Capital, CoinDesk stated in a Telegram chat.
Accumulation addresses have been those that are with at least 2 incoming non-dust transfers (demonstrating minuscule amounts of bitcoin) and have never been spending funds.
The metric discounts addresses that belong to exchanges and miners, and addresses active more than seven 7 ago to exclude the lost coins.
The deviation between accumulation addresses and prices suggests that investors view the latest price drop as a distinctive bull market pullback and they expect the prices to rise again.
“Markets typically retrace one third or more in a bull market after local euphoria,” Zhu wrote on his Twitter account this Friday, suggesting prices might drop to as low as $8,800 but still will be a “healthy target.”
Bitcoin fell by more than 10% last Thursday, which confirmed a head-and-shoulders breakdown – also known as a bearish reversal pattern – it was a violation of the 6-month-long bull market trendline.
Normally such patterns tend to invite more considerable chart-driven selling, causing deeper price drops.
To this point, Bitcoin has been managing to defend the $10K support – probably a sign of an essential bullish tone in the cryptocurrency market.
Zhu said in another tweet, “I am flabbergasted by the strength shown at $10,000, and it probably means $100,000 is more likely than $5,000 at this stage”.
At this time, Bitcoin is changing hands near $10,120, showing a 1.59% decline on the day.