And here we are fast approaching the end of the month that is already looking extremely unlikely to live up to the expectations of the majority of crypto investors and enthusiasts. Historically November has been the most bullish one of the 12 divisions of the calendar year with an average increase in Bitcoin's price by incredible 55% with just three red months out of last ten (the original cryptocurrency was born in 2009 but its prices over the first 2 years were so microscopical that it doesn't make any sense to include them in this kind of statistics).
The last quarter of 2020 ended with increasingly bullish 3 months in a row: October +28%, November +42% & December +46%, so naturally for the end of this year most of us have also been expecting a similar pattern especially after what happened over this past October during which BTC (BTC/USD) grew from $43.8k all the way up to $61.2k (appreciation by 39.7% - fully deserving of at least two new popular names: Shocktober & Uptober).
To lighten up the mood a bit let us propose an appropriate & humorous name for the current month – Nolambovember. Sadly, this is the best we can do for now but if any of our readers has got something better, drop us a line and you might get immortalized in the very next article on Bitcoin. But on a more serious note, what has been happening to the King of crypto, that's the main question on our minds at the moment: is it time to take profits before a bear market begins? Or cut losses before they get so huge that it won't make sense? Buy the dip? What if it's not a dip or if it's one of many dips to come?
Or what if you get rid of your crypto now and the prices start rising again in December like they usually do, because the last month of the year saw an average increase at 13% in previous 10 years. This is definitely the most puzzling phase of this bull market so far and there admittedly are no clear answers unfortunately, so we will have a good look at some crucial on-chain metrics now followed by TA in order to try and calm the nerves & help our readers to make a rational decision, hopefully.
We know exactly how you feel and a quick glance at today's Fear & Greed Index, which has just flipped back to Extreme Fear, (21/100 – the lowest reading since the 30th of September, but that's already our first green flag for a potential reversal) is only a confirmation of our assumptions. So let's dive in.
THREE MAIN ON-CHAIN METRICS THIS WEEK
There are three vital metrics that we need to look into in terms of supply/demand ratio that will greatly help us predict the momentum and likely direction of Bitcoin's price action in the coming weeks and possibly months and these are: activity of unique addresses, changes in whale wallets holdings and MVRV, which essentially tells us whether investors are in profit or in the red (from this we can gauge how likely they are to take profits).
So first of all, the total number of active unique addresses on BTC network declined by roughly 50% in May when the price crashed scaring mainly retail investors away. Then, once the coin's value started picking up again in late July, the network activity quickly followed suit and was on the increase until pretty much mid-November. Last two weeks it's been experiencing a small correction but one good sign is that is hasn't crashed meaning that the demand is staying solid in spite of the current serious correction. If this still is the case over the next week, then that's going to a bullish signal that the price might reverse towards the upside.
As far as whales we have looked into addresses that hold between 100-10k BTC, which are basically millionaires but mostly not big exchanges. These investors started distributing some of their coins (roughly 50k tokens) in late October when Bitcoin was hitting new ATH values, but in the recent 8-9 days that has completely changed and they've accumulated another 70k BTC. In layman's terms the whales have been buying the latest dip from 'paper hands' and that's another positive sign for hodlers.
And the last one – MVRV which is showing us that in the last 30 days an average recent investor is actually in the red (around 10% loss). What this means is basically that the deeper they are in the red, the less likely they will be to sell soon. In the past whenever MVRV showed that an average Bitcoiner was 20% or more in profit, the increased selling pressure was always just around the corner. If we combine these 3 metrics then what we get is a pretty optimistic indication that we might be seeing a reversal of the current price action in December.
Turning to the charts, BTC is presently trading at $54.5k and fighting hard to stay above the 100-day MA, which held the price from falling during its previous correction back in September. Around the $54k mark we also notice a nice confluence of this very MA with an important support level which gives us some hope that Bitcoin won't have to test its next support at $50k. BTC has lost 21% in value since the ATH set on the 10th of November, so obviously it's in the short-term downtrend as evidenced by MACD and RSI below 40 that is at the lowest reading for 9 weeks, so we might be seeing a turnaround point on the horizon finally.
Bitcoin needs to hold above the 100-day Simple Moving Average over the weekend, which won't be a piece of cake, and start moving upwards in order to regain the $60k mark and the 50-day MA and if it manages to complete this mission the retail confidence should come back and help to push it further up and potentially towards new ATH territory. On the other hand, if it loses the current support, then the next hope station is at $50k and farther down at $46-47k where there all-important 200-day MA should be by then. Another extensive Bitcoin update next Saturday at 2PM, so make sure to check back in.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.