Three Reasons Bitcoin Can Return to $ 60,000 Despite Eliminating Last Week’s Profit

Bitcoin (BTC) fell below $ 38,000 on Monday, abandoning all profits last week and BTC / USD above $ 45,000.

BTC falls below $ 40,000 as oil soars

Losses were primarily due to the sale of the entire risk-on market. This is due to the international oil benchmark Brent crude rising to about $ 139 a barrel at the beginning of Monday, the highest level since 2008.

Nonetheless, Bitcoin’s inability to provide a hedge against ongoing market volatility also cast doubt on its status as a “safe haven” with a correlation coefficient of 0.87 with the Nasdaq Composite on Monday. rice field.

BTC / USD Weekly Price Chart Featuring Correlation with Nasdaq and Gold Source: TradingView

Conversely, the correlation between Bitcoin and its top rival gold is minus 0.38, emphasizing that Bitcoin is moving significantly in opposite directions during the ongoing market turmoil.

On the one hand, with the worsening geopolitical conflict between Russia and Ukraine and the outlook for a rate hike in March, Bitcoin’s decline remains likely to continue.

Nonetheless, some technical and on-chain indicators are flashing bullish on lower timeframes, suggesting that potential prices will recover towards $ 60,000 in the coming months. increase.

Multi-year ascending trend line support

If history repeats itself, Bitcoin’s recent decline to multi-year uptrend line support could set a potential rebound stage towards a resistance level of $ 60,000.

BTC / USD weekly price chart featuring bear market within technical pattern Source: TradingView

In particular, BTC’s trendline support, in combination with the horizontal resistance level above, constitutes a technical pattern called an upward triangle. This setup has been active since December 2020, with the lower level acting as a storage area and the upper level acting as a trader’s distribution area. ..

Increasing number of BTC whales

Elsewhere, on-chain data provided by CoinMetrics shows that rich investors are buying Bitcoin close to the same level.

For example, the number of Bitcoin addresses holding at least 1,000 BTC surged from 2,127 on February 27th to 2,266 on February 28th.

Bitcoin addresses with balance over 1KBTC Source: CoinMetrics, Messari

Over the same period, BTC prices rose from nearly $ 38,000 to nearly $ 45,000. As of March 6, the number of Bitcoin addresses dropped to just 2,263, even though the BTC was below $ 38,000. This suggests that rich investors have decided to hold Bitcoin tokens despite the tentative downsides.

Related: Digital Gold Narrative, as long as MicroStrategy holds Bitcoin, executives say

Independent market analyst Johal Miles further said that the area between $ 33,000 and $ 38,000 is a “mass storage zone” for Bitcoin bulls and “difficult for bears” to cross this range. I added.

Bitcoin outflow tends to remain the same

Weekly outflows from the Bitcoin exchange have been up 81% since October 2021 even though BTC is trading near its 6-month low, according to data from crypto analysis service Santiment. was.

“Interestingly, in 21 of the last 26 weeks, BTC has moved more often from the exchange than to the exchange,” Santiment said. Tweet Quoted the BTC Exchange Flow Balance Chart attached below on Monday.

BTC Exchange Flow Balance Source: Santiment

Increasing Bitcoin outflows from exchanges suggest investors are trying to keep them longer. Conversely, increasing the inflow of Bitcoin to the exchange indicates the intention to exchange BTC for other digital assets or fiat currencies.

BTC Exchange Reserve Source: CryptoQuant

Overall, the amount of BTC on exchanges continues to decline, with less than 2.4 million BTC currently on crypto exchanges, the lowest since September 2018, according to CryptoQuant.

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