Bitcoin (BTC) experienced a sharp decline of 4.4% in just four hours on May 1, dropping below the $58,000 mark for the first time in two months. On-chain data reveals the main factors contributing to this bearish trend.
The decline in the price of Bitcoin can be attributed to the positive Q1 earnings reports from major tech companies, which diverted investors’ attention towards the stock markets. This further amplified the already slowing market demand for BTC since the 2024 Halving event.
The chart above depicts the recent downward movement that pushed BTC below the $58,000 mark, a level not seen since February 28, 2024. While the stagnant performance was initially attributed to weak post-halving demand, it now appears that long-term investors are actively selling off their BTC positions, fueling the ongoing downtrend.
The selling activity of long-term holders has been a key driver of the price decline over the past two weeks. The Age Consumed metric, which measures the on-chain activity of long-term holders, has been steadily increasing since April 20. This indicates that many long-term holders have started to sell their coins following the halving.
On April 30, the Bitcoin Age Consumed reached 14.37 million, marking a 471% increase from the 2.51 million recorded on the day of the halving. When long-term investors flood the market during periods of low demand, it reduces the supply and creates fear, uncertainty, and doubt (FUD) among other stakeholders.
Based on historical patterns, significant spikes in Age Consumed have often led to price fluctuations in Bitcoin. If this pattern continues, the recent 471% surge in long-term holders’ activity could be a precursor to a price breakdown below $55,000 in the near future.
However, data from IntoTheBlock suggests that Bitcoin bears will face challenges in overcoming the support buy-wall at $56,000. This indicates that existing holders have acquired a significant amount of BTC at an average price of $56,100, and they may defend their positions by making covering purchases. If the bears manage to breach this buy-wall, a price breakdown below $55,000 could be imminent.
On the other hand, with BTC now trading at its lowest level in two months, strategic bullish traders may see it as an opportune time to enter new positions. If this scenario unfolds, the price of BTC could quickly rebound above $60,000. However, the initial sell-wall at the $58,650 territory could invalidate this optimistic outlook.
It is important to note that this article provides information and should not be considered financial advice. The views expressed here are the author’s personal opinions and do not reflect the opinion of The Crypto Basic. Readers are advised to conduct thorough research before making any investment decisions, and The Crypto Basic is not responsible for any financial losses.