- Bitcoin’s current retracement is seen as a precursor to a potential big rally towards $73,000.
- Market statistics and analysis indicate strong fundamentals for BTC, despite a decline in the number of active addresses.
Bitcoin [BTC] has recently shown significant bullish behavior, marking a notable increase of almost 10% from last week’s low of $65,000 to a high of $71,000 this week.
However, the cryptocurrency has seen a slight decline and is currently trading at $68,659. This pause in upward momentum is seen by analysts as a harbinger of a potential big rally.
A return to $73,000 could mark the beginning of what is being termed as the “breakout velocity” phase for Bitcoin, indicating a possible acceleration away from the current price level to new highs.
Analyzing market statistics and investor behavior
Crypto analyst James Check, in a recent market report on May 21 described this price of $73,000 as crucial to Bitcoin’s trajectory.
The term “breakout velocity,” borrowed from astrophysics, is used here to indicate the minimum velocity Bitcoin would need to break away from its current range and begin a more aggressive price increase without additional pressure.
James Check points to the importance of the Short-Term Holder (STH) Market Value to Realized Value (MVRV) measure, which he says shows the market is not yet “overloaded, overbought and oversaturated.”
Source: Checkonchain Newsletter
Check suggests that while the market is enthusiastic, it has not yet entered a phase of euphoria that often precedes a significant pullback.
The analyst revealed that the market is building a strong foundation for a rally, with $73,000 being a key point that could trigger a more substantial rise in Bitcoin’s price.
However, there is also caution around this price level. Short-term holders, defined as portfolios that have held Bitcoin for less than 155 days, are currently making “sufficient profits,” which could lead to some resistance due to potential selling pressure.
The AVIV momentum oscillator has shown support, especially over the 90-day period, showing that price movements relative to on-chain capital inflows are recovering strongly, typical of a bull market phase.
Source: Checkonchain Newsletter
Key observations from data about the chain
AMBcrypto’s analysis, powered by facts van Santiment points to a decline in the number of active Bitcoin addresses from over 17 million in March to less than 13 million currently.
Source: Santiment
Despite this decline, Bitcoin has continued to show bullish moves, breaking multiple resistance levels. This suggests that even though the network’s activity is decreasing, the price is still being driven upward by other factors.
from Glassnode facts further showed that the number of new addresses has also decreased, creating a pattern of lower peaks and valleys. This supports Check’s view that the Bitcoin market has not yet reached a state of euphoria, which usually indicates an overheated market.
Source: Glassnode
On the 30-minute chart, Bitcoin recently broke through a crucial demand zone, indicating that the asset could retreat further to gather more liquidity before resuming its uptrend.
Read Bitcoin’s [BTC] Price forecast 2024-25
Source: TradingView
An important level to keep an eye on, according to AMBCrypto’s recent report, is approximately $71,500. A weekly candle close above this point could be the trigger for Bitcoin to break out of the current reaccumulation range.
This level is consistent with Check’s analysis that a rise above $73,000 could usher in the breakout velocity phase, marking a potentially explosive next phase in Bitcoin’s market cycle.