Bitcoin price drops can be linked to activity on the chain

by James · May 13, 2023

Bitcoin price drops can be linked to activity in the chain

Bitcoin (BTC) has experienced downward price pressure in May, and the token failed to surpass the $30,000 resistance mark. This development may be linked to on-chain activities indicating an increase in the number of Bitcoins sold on exchanges during this period.

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300,000 Bitcoin sold on exchanges in May

In accordance CryptoQuant, a data scientist, over 300,000 bitcoins bought between one and six months ago have been sold this month. It is worth noting that the majority of these sales were made by people who bought the cryptocurrency between November last year and January this year.

According to the data researcher, 266,000 bitcoins were bought between November and January, while 78,000 bitcoins bought between January and March were sold in May. The motivation behind these sales may be to profit from the significant price increase that Bitcoin has experienced since the investors bought it.

From November to April, the price of Bitcoin rose from $16,000 to $31,000. Since April, however, the cryptocurrency has hit lower highs, possibly due to the selling activity of these investors in May.

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Bitcoin shows strength around $27,000

Bitcoin’s price action over the past few days was significant as it demonstrated the resilience of the cryptocurrency in the face of market volatility. As mentioned, Bitcoin had fallen as low as $26,800 before quickly rebounding and testing support at the $27,000 low. This successful retest of support once again confirmed the strength of Bitcoin in this price zone.

The market’s high volatility yesterday can be attributed to the US inflation report, which revealed a higher than expected price increase. In addition, false rumors that the US government was selling Bitcoin caused bearish pressure on the market. Despite these events, Bitcoin held strong and was able to retest support.

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Bitcoin has tested the support around $27,000 several times in the last two months and has formed a solid bottom. In addition, The fear and greed index has fallen, putting the market back into neutral territory. While this level is not necessarily bad when taken at face value, it is worrying that the index has fallen from greed back to neutral.

Nevertheless, in spite of some analysts are predicting that the cryptocurrency may fall to lower levels, it has not fallen below this price zone. This is a positive sign for investors as it shows that there is a strong demand for Bitcoin at this level. The Bitcoin price has consolidated as the market seeks a new equilibrium following the recent price correction.

Bitcoin price

At the time of writing, Bitcoin is trading at $26,804 with a 24-hour price increase of 2%. It remains to be seen whether the token will make a renewed push towards the $30,000 resistance mark in the coming days.