This Market Trend Shows The Bitcoin Price Is Ready For Next Leg Up

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Bitcoin looks poised for its next leg up.

An ongoing battle between the bulls and bears is currently underway for the 200-day moving average of the bitcoin price. The 200-day moving average is often viewed by traders and market analysts alike as a key indicator for the momentum of a given asset, thus the recent resistance and chop above and below the indicator is quite telling. 

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However, bears beware, as one of the most significant bitcoin market trends over the past two years is foreshadowing some extreme strength in the price of bitcoin over the coming weeks/months.

The bitcoin exchange balance, often covered in The Daily Dive, continues the dominant trend it has been following since the start of 2020 — massive accumulation and withdrawal of coins from exchanges.

In fact, there have only been two other times that more bitcoin have been withdrawn from exchanges on a net basis in the history of Bitcoin. The first was directly following the COVID-19-induced derivatives blowup, which tanked global markets and crashed the price of bitcoin by nearly 50% in a single day.

The second occasion was in November of last year, following the announcement of an adoption of a corporate bitcoin standard by business intelligence firm MicroStrategy, as well as a $50 million purchase by fintech company Square. 

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When looking at the percentage of the circulating bitcoin supply not on exchanges and the price of bitcoin, there has been nearly a one-to-one correlation over the last 18 months, with the occasional lag in price.

We saw this occur in the summer of 2020 as bitcoin was being withdrawn from exchanges on a net basis at a feverish pace while price remained dormant until November, when bitcoin began its violent uptrend.

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