Bitcoin’s price spiked on May 26, breaking the $ 40,000 mark for the first time in five days as traders brushed aside concerns about China’s crypto ban and the United States’ crypto tax proposal.
The benchmark’s cryptocurrency hit an intraday high of $ 40,855 before falling down on profit-taking.
Meanwhile, analysts like Cheds and Korous AK expect BTC / USD to hit $ 42,000 in the short term, but advise caution on extended up positions unless the spot market confirms a clear bullish breakout.
Cheds in particular showed bullish conviction if Bitcoin recapture its 200-day simple moving average (200-day SMA), which is currently around $ 40,600. In the past, the wave has served as a strong floor against long-term bearish trends.
Be careful if you get too bullish until $ BTC #Bitcoin turns both the 42,000 area and the MA 200 back into support on a daily basis
– Cheds (@BigCheds) May 26, 2021
More support for a bullish Bitcoin outlook came from on-chain data. At least three blockchain-focused metrics showed that the cryptocurrency had bottomed out after crashing to $ 30,000 on May 19.
Bitcoin exchange deposits are declining
On-chain analytics platform Glassnode announced on May 26th that the total number of crypto addresses sending Bitcoin to cryptocurrency exchanges has declined an average of seven days.
The Number of Addresses Depositing to Exchanges metric illustrates the number of unique addresses that appear as senders in a transaction that sends money to exchanges. Put simply, it shows a decrease in the number of new Bitcoin traders who may wish to transfer BTC to exchanges to sell or trade for other assets.
New traders / investors tend to be more emotional to wild crypto price swings. However, since the Glassnode metric shows a slump in the exchanges of unique Bitcoin depositors, it signals a downward trend in potential selling pressure.
NVT hits classic bullish reversal level
Meanwhile, the average seven-day output of Bitcoin’s network value-to-transaction (NVT) signal has fallen to a 14-month low, Glassnode data shows.
Bitcoin’s price reacted bullishly when the NVT signal touched 500 on the hourly chart, as shown in the chart above. Based on the fractal sentiment alone, the metric now points to a sharp bullish reversal in the Bitcoin market as it trades 36% above its previous low of $ 30,000.
Accumulation address upward trend
Another Glassnode metric shows that the recent drop in Bitcoin prices has barely shaken long-term upward sentiment among investors. The “number of accumulation addresses” hit a record high when the BTC / USD exchange rate hit $ 30,000 on May 19, and the total rose to over 545,000.
#Bitcoin HODL Army grows from this dip. pic.twitter.com/L8q6vO0rZl
– Bitcoin Archive (@BTC_Archive) May 26, 2021
Glassnode defines accumulation addresses as those that have at least two incoming Bitcoin transactions and have never spent any money. The analytics service considers these addresses to be long-term owners.
A spike in accumulation addresses during the BTC price crash, which destroyed billions in leveraged positions, shows that long-term bulls have absorbed selling pressure. This is another sign of bearish exhaustion as Bitcoin seeks to push $ 40,000 to new support levels.