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Bitcoin, the largest digital asset, has faced significant volatility in the last few days, dropping close to the $91,500 price level. Following its recent notable decline in price, bullish sentiment seems to be fading among investors and traders as the flagship asset faces significant capital outflows.
Aftermath of Huge Capital Outflows In Bitcoin
As Bitcoin’s price continues to struggle, reports from advanced investment and on-chain data platform Alphractal show that the asset has witnessed a huge wave of capital outflow. A rise in capital outflows indicates a shift in investors’ confidence in BTC’s prospects.
This trend comes in light of investors and traders reassessing their positions following BTC’s latest price movements toward a downside trajectory. Also, BTC’s decline in price has sparked concerns about its capacity to maintain its present levels as the platform points to crucial support areas ahead.
As highlighted by the platform, the withdrawal of capital from Bitcoin raises the possibility that market makers are looking for fresh price points at which to reenter the market. Thus Alphractal has underscored potential scenarios and price points that may develop in the upcoming days.
With substantial capital flowing out of BTC, Alphractal noted that the Short-Term Holder Realized price is currently situated at the $86,200 level. During bull markets, this region frequently serves as support and is the initial target if Bitcoin continues to drop. Bullish momentum usually persists when BTC recovers from this point.
Bitcoin seeing a wave of capital outflows | Source: Alphractal on X
Alphractal also mentioned another price level of $80,700, representing an area of hope/denial band. The STH & LTH Sentiment Price Band indicator identifies this range, which has historically maintained bullish trends and reflects the sentiment thermometer of both short and long-term investors.
However, should the market experience another collapse akin to the one that occurred in May 2021, Bitcoin might fall to lower support levels between $66,000 and $60,000. These zones correspond to metrics like the Active Realized Price and True Market Mean Price, which determine the ideal average price of the blockchain while omitting newly mined coins.
Since BTC is consolidating near key support levels, the downtrend may be halted once substantial capital begins to enter the market. In the meantime, market participants continue to observe the situation for signs of a possible rebound or an extended downward pressure.
Short-Term Holder Cost-Basis At Critical Level
Bitcoin’s latest price movement has put the Short-Term Holder Cost Basis at a critical level. Data from leading on-chain and financial platform Glassnode reveals that the short-term holder cost basis is currently positioned at the $88,000 mark for assessing the momentum of BTC’s price.
Using the UTXO Realized Price Distribution (URPD) metric, Glassnode finds that there is insufficient volume below the STH cost basis. According to the platform, a decisive loss of this level could trigger an extension of the downswing.
Featured image from Unsplash, chart from Tradingview.com
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