70% of BTC has been inactive for a year — 5 Bitcoin things to know this week

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22 Jan 2024

Bitcoin’s recent price movements suggest a slower grind after earlier gains, but market data indicates potential for a sustained rally. As the cryptocurrency starts Thanksgiving week in the United States at $37,000, bullish sentiment persists despite challenges. Here are five key insights shaping the Bitcoin landscape this week:

1. Dormant BTC Supply Surpasses 70%:

. Over 70% of Bitcoin’s total supply has remained dormant for a year or more, signaling a reluctance among long-term holders to sell despite price fluctuations.
. This statistic, reaching an all-time high, reflects a strong conviction among investors amid the current market dynamics.
BTC/USD annotated chart. Michaël van de Poppe/X
BTC/USD monthly returns (screenshot). Source: CoinGlass

2. BTC Price Action and Market Sentiment:

. Bitcoin’s price hovers around $37,000, with recent highs showing a slower upward trend.
. Traders anticipate a persistent demand for spot BTC to breach significant resistance levels, with key levels at $38,000 and crucial support at $33,000-$34,500.
Fed target rate probabilities chart. Source: CME Group
Bitcoin network fundamentals overview (screenshot). Source: BTC.com

3. Macro Week Ahead:

. U.S. Thanksgiving week brings a focus on macroeconomic data releases, with jobless claims on November 22.
. Bitcoin has become less susceptible to macro-induced volatility, but unexpected unemployment data could still impact short-term momentum.
Bitcoin crypto market cap dominance 1-week chart. Source: TradingView

4. Bitcoin Network Fundamentals and Mining Analysis:

. Bitcoin’s hash rate and mining difficulty remain near all-time highs, indicating a robust network.
. Analysts, however, express caution, noting that previous highs in hash rate often precede a price downturn. The potential pullback target is suggested to be between $30,000-$31,500.
. Concerns arise over a potential increase in Bitcoin mining activity ahead of the April 2024 halving, with miners aiming to accumulate more BTC.
ETH/BTC 1-week chart. Source: TradingView

5. Bitcoin Dominance and Altcoin Market Dynamics:

. Bitcoin’s dominance in the total crypto market cap stands at around 52.5%, signaling a resurgence in classic crypto bull market dynamics.
. Altcoins retracing after a month of significant gains may see rebounds based on market sentiment.
BTC supply dormant for 1 year or more chart. Source: William Clemente/X

Final Thoughts:

Despite the problems and regression in the price of Bitcoin, the cryptocurrency environment remains upbeat. Long-term holder confidence, along with good network fundamentals, supports the possibility of a sustained rally. Traders are keeping a close eye on major support and resistance levels, as well as macroeconomic factors, in order to forecast the market’s direction for the coming week. As Bitcoin’s dominance grows, the stage is set for market dynamics resembling a traditional crypto bull run. However, investors should proceed with caution and undertake extensive study before making any judgments.
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Written by Shantanu Gupta

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Coinmonks
Crypto, Blockchain, and Metaverse Content Creator | Encouraging You to Become a Profitable Crypto Trader💵🚀 and Explore the Digital Frontier.