There are a couple of things that have been evident for the Bitcoin market over the past week. Volumes have significantly reduced in the market and volatility has been squeezed in the market. On-chain metrics also facilitated a flat curve, so at press time it was difficult to gauge a reactionary shift for Bitcoin in the short term.
However, some indicators seemed to suggest an upcoming change, regardless of the press-time silence on the price charts.
Increase in the ratio of liquid supply and vivacity of the coins
The accumulation of Bitcoin has been explained through various metrics in recent months, but a qualitative way of understanding the supply is the flow of the Liquid Supply Ratio. While monitoring the illiquid bid change, it was noted that as of press time, it has been increasing since late June, an observation that meant a supply shock was still an option.
Now, another key indicator that can be used to analyze the broader trend is Coin Liveliness. Coin Liveliness is basically the ratio between the destroyed coin days and the created coin days.
Now, according to the Coin Liveliness chart, the downtrend seemed to be pointing towards an accumulation phase for Bitcoin and historically this has led to a series of rallies. However, it is important to note that a build-up can last for a longer period of time, during which time the price can go down massively.
Yet, in fact, Bitcoin's UTXO distribution between $ 31k and $ 35k is an important signal. According to the data, 9,94% of BTC's money supply has moved within the aforementioned range, with the same improvement at 17,55% for the $ 31k and $ 40k range.
Movements of such high magnitude within such a rigid price range allow the asset to consolidate between those particular price points, thus opening up to the idea that the BTC fund could be in. The fact that BTC fell below the quotation of $ 30k at press time does not necessarily discount even the observation.
Red flag alert for Bitcoin?
Now, looking at the market on a weekly scale, the charts didn't look very optimistic. Bitcoin has closed its lowest candle since December 2020. Ergo, BTC is getting in the way with its key weekly support. Below $ 31500 - $ 30.000, the asset has no rigid price support and, in theory, could plummet to $ 24.000.
Still, the rebound can be expected to be dominant as most on-chain metrics cannot be collectively false about a bullish recovery. It's just a question of how and when it comes into play.
