Bitcoin, the leading cryptocurrency, has recently exhibited a decline in on-chain activity, indicating that investors are opting to retain their coins rather than engage in transactions with potential buyers, as noted by Ki Young Ju, the CEO of CryptoQuant.
Ki shared a chart regarding Bitcoin velocity on August 25 through his X post, showing the speed at which the units of BTC are circulated within the network in relation to the number of transactions each day, and revealed that it has reached multi-year lows on a daily basis.
Ki’s analysis indicates that this situation may be interpreted in two ways: either as an indication that whales keep holding onto their coins as long as they can or as a sign indicating that new investors are showing a decline in interest in this asset class.
In recent months, Bitcoin has remained stagnant and lacks clear price direction – hovering around $26,000 without any significant fluctuations. Additionally, Ki observed a parallel absence of trading activity among high-volume investors—an observation suggestive of a “wait and see” sentiment permeating the BTC market.
On the other hand, earlier this year, when fresh capital influx propelled BTC/USD into a streak of impressive gains during the first quarter of this year, shattering all-time highs above $20,000 for the first time ever, this marks a clear contrast.
Bitcoin Oversold At $26,000?
The implication of the volume data holds significant importance. Back in late 2020, when Bitcoin’s velocity experienced a rebound from its long-term low, it foreshadowed the breakthrough that propelled Bitcoin past $20,000 and led to its subsequent surge to new record highs a year later.
However, the current situation shows a notable divergence. At its current level of $26,000, Bitcoin appears to be oversold based on its daily relative strength index (RSI), which is a technical indicator that is used to measure the price momentum.
Notably, this month witnessed the lowest 12-hour RSI in five years with no signs of recovery yet, suggesting waning interest from investors. This begs the question: Will Bitcoin undergo another price breakout similar to Q4 2020 or succumb to further downward pressure? Only time will reveal the answer.
Nevertheless, some analysts maintain a bullish stance on Bitcoin’s overall trajectory and consider the ongoing consolidation as a healthy correction before the next significant upward move.
Currently, BTC is trading at $26,043.72, with a market capitalization of $507.03 billion. The 24-hour trading volume for Bitcoin is $7.71 billion, while its value has increased by +0.44% in the last 24 hours.
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