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Is this the best time to buy BTC?
Bitcoin is rapidly selling off. At spot rates, the world’s most valuable coin is down more than 5% on the last day of trading and continues to fall steeply, easily surpassing $60,000. The psychological round number has been a level to watch in recent days, especially after the weekend’s gains.
Bitcoin Drops: Is It Time to Buy?
As Bitcoin is falling and sellers are relentless, one analyst thinks this is the right time to accumulate. In a post on X, the analyst he claims that Bitcoin is on the verge of the “Spring” phase within the Wyckoff reaccumulation model.
The Wyckoff pattern is a technical analysis tool used by traders and chartists. Traditionally, it uses price and volume patterns to identify potential price movements.
While Wyckoff describes multiple phases when it comes to price patterns, the “Spring” phase is the one that most traders always follow. When prices “jump” higher from this phase, the coin tends to break out of the current range on the back of increasing trading volume.
Looking at the daily chart of Bitcoin, it is clear that prices have been consolidating. So far, the primary support is around the May and June 2024 lows. Then, prices broke down, falling below $57,000 and bottoming out at around $56,500 in May. Resistance is found between $72,000 and the March 2024 highs on the upper side.
As it stands, Bitcoin is retesting primary support, with the July 4 bar piercing $60,000 and dropping to $56,900 in the morning. Based on the Wyckoff model, prices are preparing for the spring phase. This preview will hold, especially if there is no confirmation of today’s losses.
Miner capitulates even as long-term holders aren’t selling
While the analyst is optimistic, not everyone is optimistic. According to Willy Woo, an on-chain analyst, the current sell-off is mainly driven from the capitulation of miners. Looking at the Bitcoin Hash Ribbons, the decline seems to have begun, as the market is eliminating the “weak” miners.
From April 20th HalvingThe Bitcoin network automatically halved the BTC reward to 3,125 BTC. This automatic move increased the pressure on miners, who must invest capital to purchase equipment and operate efficiently. With declining revenue, only the most efficient miners have a chance to operate profitably.
As a result, those who fail to upgrade their equipment are forced out of the scene. If they don’t, they remain operational with no chance of consistently winning block rewards. Over the past eight months, on-chain data Shows that miners have dumped BTC, bucking the bullish trend of Q1 2024 and exacerbating the April correction.
In the midst of all this, long-term holders, mostly institutions and whales, stopped selling in mid-January 2024. Then, the U.S. Securities and Exchange Commission (SEC) approved the first Bitcoin exchange-traded fund (ETF).
As evidence of this, Bitcoin’s “illiquid supply,” which shows the number of coins that have not been moved for over two years, is near an all-time high.
Feature image from DALLE, chart from TradingView