Market overview: Customers still 'hodling' Bitcoin since December 2020, Coinbase data shows

The price of Bitcoin, which peaked at around $69,000 six months ago, has dropped by more than 50%. Despite this, most of its wealthiest investors were not forced to sell.

According to data from Coinbase, the number of institutional investors who have bought and sold Bitcoin has increased significantly since the fourth quarter of 2020. Although the price of Bitcoin has dropped significantly, most of its wealthiest investors were still willing to hold onto their investments.

Ki-Young Ju, the CEO of cryptoQuant, noted that the same amount of Bitcoin was still in the Coinbase wallets in December 2020. He said that this indicates that most institutional investors were still holding onto their investments.

"For most cases, the same amount of BTC is still in the (custodian) wallets, which flowed out from Coinbase for highly likely institutional purchases in December 2020," Ju said.

If the number of institutional investors who bought and sold Bitcoin during the fourth quarter of 2020 is correct, they are currently sitting on around 30% of their total investments. Their decision to not sell their Bitcoin positions despite the price of Bitcoin dropping significantly, and their continued optimism, are a strong indication of their stance on the asset.

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This indicates that institutions are still able to withstand any additional declines in the price of Bitcoin. It also means that they will still be able to hold onto their positions until the price of Bitcoin drops to around $23,000.

Bitcoin market overview

After a volatile week, the price of Bitcoin has started to bounce back in the last 48 hours. Over the previous two days, it has gained 8% and is currently trading at around $31,500. After last week's strong performance, the recent price rally is also due to Bitcoin trying to catch up with the U.S. equity market.

According to a report by Glassnode, Bitcoin has entered a strong accumulation zone following the liquidation of Terra. The liquidation of more than 80,000 Bitcoin had already started to positively affect the asset's accumulation zone.

The performance of Bitcoin's Accumulation Trend Score has also changed significantly over the last two weeks, for it has returned near perfect scores. This indicates that the various entities on the network are actively adding to their holdings.

Possible trend reversal after accumulation

Since May 12, the price of Bitcoin has been fluctuating within the range of $29,500 to $31,500. Although it is expected that the price of Bitcoin will continue to decline, technical analysts are still expecting the asset to trade in a sideways manner.

Independent market analyst PostyXBT noted that Bitcoin could drop to its 200-week moving average to test its support at around $21,000.

According to Rekt Capital, a drop below the 200-week moving average could cause Bitcoin to test the support level at $15,500.

Daily chart analysis of Bitcoin shows that the asset has managed to bounce off the support level in June 2021. It shows that the price of Bitcoin is still in a bull run and is unlikely to test its lower support levels.

The first resistance level that Bitcoin needs to break is the 50-day moving average, which is a psychological level that acts as a support for both the uptrends. A break above this level would signal that the asset's long-term trend will reverse.