Network contraction points to looming market crash
The Bitcoin (BTC) network is showing signs of contraction, which could lead to a potential price drop.
As the number of wallets decreases, it indicates a lower demand for the cryptocurrency, and a decrease in user adoption rates, according to the network analysis of crypto market expert Ali Martinez on May 8.
When there are fewer wallets, that means fewer people are actively using Bitcoin. This in turn lowers the demand for the cryptocurrency, which can lead to a drop in price. This trend is particularly worrying since the price of Bitcoin has already been volatile in recent months, with Bitcoin creating a series of lower highs and lower lows.
The decline in user adoption rates can be attributed to several factors. For example, some investors may have shifted their focus to other cryptocurrencies or investment opportunities, while others may have been put off by the high fees associated with using Bitcoin in the past week, with the highest level since May 2021.
Bitcoin price analysis
Cryptanalyst Michael van de Poppe has weighed in on the recent price action around Bitcoin, providing insight into potential price levels to watch in the coming days. In a recent tweet, van de Poppe noted that the key level to break for Bitcoin was $29,200, but despite a bounce towards it, the level was not breached.
In addition to this, there has been some FUD (Fear, Uncertainty and Doubt) regarding Binance, a major cryptocurrency exchange, which may add to the negative sentiment surrounding Bitcoin as it temporarily halted withdrawals of its flagship digital asset.
Looking ahead, the trading expert suggested that potential longs could be found at $27,400 or $26,800, with a target against the CME gap of $29,600. This indicates that van de Poppe sees potential for an increase in the price of Bitcoin, but investors should be cautious and monitor the situation closely.
Finally, Bitcoin continues to experience a bearish trend, with the cryptocurrency currently trading at $27,973, representing a decrease of 2.87% in the last 24 hours. Over the past week, Bitcoin has also fallen by 1.97%, indicating the continuation of a bearish market.
Disclaimer: The content of this page should not be considered investment advice. Investment is speculative. When you invest, your capital is at risk.
