Bitcoin stuck below $50K, and Blockchain data may indicate why

Bitcoin stuck below $50K, and Blockchain data may indicate why

Bitcoin Business Cryptocurrency
March 6, 2021 by 99pigs
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Bitcoin managed to end the first week of March with little "YAY" as the market reset after the prior week’s 21% dive. There are more indications the global economic recovery might come faster than previously expected, and traders are now speculating on what that might mean for the largest cryptocurrency Bitcoin. 
Bitcoin Table Courses Finance  - RoyBuri / Pixabay

This week’s negative price movement in bitcoin showed in the trading volume from multiple U.S.-focused exchanges. It has been flat over the past week, roughly a third of levels seen in the recent weeks.

“Bitcoin is consolidating around $50,000 after rebounding from lows earlier in the week,” Jason Lau, COO at San Francisco-based crypto exchange OKCoin, said. “Most recently, its price action has been hovering within this range, while open interest in bitcoin futures has also remained consistent.”

There also appears to be a key short-term resistance level of $50,000 according to IntoTheBlock’s newsletter coming out last Friday, citing a key blockchain data metric In/out of the money around price (IOMAP).

  • Bitcoin (BTC) trading around $49,196.78 as of 21:00 UTC. Climbing 1.93% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $46,393.39-$49,462.13 (tradingview.com)
  • BTC trades above its 10-hour and 50-hour averages on the hourly chart, a bullish signal for market technicians.

“A large cluster of addresses (1.46 million) and volume (650,970 BTC) had been bought slightly below $50,000,” IntoTheBlock wrote in the newsletter. “This price range, which already saw high levels of trading activity, is expected to act as strong resistance short-term as investors in this price range may look to break-even on their positions at this point.”

At the same time, another large cluster of addresses and volume, bought in a range of $45,600 to $47,000 currently at the money, are likely to provide strong support, IntoTheBlock’s data shows.

“Ultimately, a break past $45,000 may mean bitcoin will retrace further, while a breakout past $50,000 may suggest it is poised for new highs,” IntoTheBlock added. “These are the levels to watch out for before being certain of the correction being over or not.”

Investors will also have to weigh macro factors including a better-than-expected February job report in the U.S., as well as surging bond yields.

Ether underperforms Bitcoin, impacting primary use case

bitcoin graphEther (ETH), the second-largest cryptocurrency by market capitalization, was up a little on Friday, trading around $1,534.25 and in the green 0.11% in 24 hours as of 21:00 UTC.

At the publishing time of this post, ether’s price was down approximately 25% from its all-time high at $2,036.55 on February 19. That’s a steeper drop-off than bitcoin 17% retreat from a record $58,332.36 on February 21.

The main reason Ether has been underperforming “is that high Ether prices are detrimental to Ethereum’s primary use case as a smart contract platform, making transactions extremely costly and resulting in activity moving to other platforms,” said Jason Lau, COO at San Francisco-based crypto exchange OKCoin.

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