Forex Analysis & Reviews: 09.02.2022 - Bitcoin's correction proves...

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09.02.2022 07:11 AM

Bitcoin's correction proves investors' confidence

The current correction cycle is gradually coming to an end. Bitcoin has confidently broken through the downtrend line and has consolidated above $40.5k. However, until a fortnight ago, the Fear and Greed Index was at the extreme fear mark. Despite this, buyers managed to defend the local bottom and prevent the price from going lower.

Bitcoin's slide through the $40k-$30k range has been accompanied by a buying dissonance. Glassnode noticed that investors completely abandoned the cryptocurrency when it fell below $35k. In this range, a breakout had to wait for a fortnight of consolidation.

The conclusion is that the buying or bullish bottom for Bitcoin is at $35k and investors are willing to wait until the one-year low at $28.7k, where there was a large cluster of long positions.

However, at the same time, Glassnode experts recorded an abnormally high jump in demand for the asset when it crossed the $36.2k mark. Analysts noticed that more than 12% of the market supply was purchased in the $36k-$42k range. More than 25% of BTC was purchased above $42k and as of 5pm, most of the coins are in minimal surplus.

In addition to the anomalous purchases typical of a bull rally rather than a consolidation period, there was a jump in the number of unique users. Glassnode notes that during the January-February accumulation, the daily number of new bitcoin addresses exceeded the usual figure (15,000) by 3,500. This shows that when certain positions were reached, investors started to buy actively and contributed to its rally.

Concluding this purchase, we would like to note the first bullish crossing of the SOPR onchain indicator since November. Buyers, for the first time, began to take profits rather than losses, indicating an overall improvement in the market situation and an increase in available volumes for holders to buy. As a result, the percentage of BTC reached an all-time high.

More importantly, a similar situation occurred in March 2021. But, unlike last year's case, the asset found its buyers much faster, indicating greater acceptance of and faith in Bitcoin. As a result of the bulls' quick and confident reaction, more than $800 million worth of bitcoin was transferred from cryptocurrency exchanges in the last week.

Technically, the cryptocurrency asset looks upbeat, though it is signalling the first signs of a recovery correction. The price has reached a level of $45.5k. However, the stochastic and RSI indices are in the bullish zone, which indicates that volumes are in place and reflects investors' willingness to pull the price higher.