Bitcoin 1 Hour Chart:
Bitcoin looks like it will break down once it breaks 19,600. The next strong support zone is near 13,000.
Bitcoin Bear Case
Strengthening USD
The U.S. dollar index, which measures the greenback against a basket of six peers, has climbed 14% so far this year and was another 0.2% higher Monday. A strengthening dollar has been a significant headwind to Bitcoin prices in the past.
September has been the worst performing month for risk assets since 1964
The FOMC has not let up on their tough inflation talk
Bitcoin Bull Case
Parabolic Bitcoin Bull Run Likely After Dormant Coin Supply Peaks, Past Data Suggests
Dormant supply peaks are springboards for upwards price action (Coindesk)
The view that bitcoin's (BTC) fate is closely tied to what the Federal Reserve (Fed) does has been widely discussed. As a result, most traders looking to time the next parabolic bull run are waiting for the world's most powerful central bank to declare victory over inflation and abandon liquidity tightening.
While the Fed decisions are undoubtedly important, indicators unrelated to macroeconomic factors and unique to the crypto market, like coin dormancy metrics, could be equally valuable in timing the next bull run.
Dormant supply peaks are springboards for upwards price action
"Dormant supply peaks are springboards for upwards price action," Nik Bhatia, author of the best-selling book Layered Money, and market analyst Joe Consorti wrote in the latest edition of The Bitcoin Layer newsletter.
As seen in the featured image, the percent of supply that was inactive for at least a year topped in January 2016 and the peak preceded a major 21-month bull run that saw prices rise from $450 to $20,000 – a staggering 4,340% rally.
Similarly, bitcoin went berserk after the metric peaked in the third quarter of 2020, rallying from $10,000 to over $60,000 in six months to April 2021.
At press time, the percent of bitcoin dormant for at least a year stood at a record 65.76%, according to data sourced from blockchain analytics firm Glassnode.
If history is a guide, bitcoin may see another meteoric rally once the metric has peaked.
Disclaimer: The material in this newsletter is for educational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product. This newsletter is not a substitute for professional investment services. Past performance is no guarantee of future results, and there is no assurance that investment objectives will be achieved. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. All investments contain risk.