Bulls are hesitant to purchase the drop if Bitcoin falls close to $35,000.

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Bitcoin’s plunge to $35,130 has made bulls wary of buying the current drop, but on-chain data suggests long-term holders continue to accumulate.

On June 18, Bitcoin (BTC) and traditional markets faced another day of downward pressure after comments from the United States Federal Reserve about the possibility of raising interest rates sooner than expected caused the price of the US dollar to rise at the expense of risk assets and treasury notes.

However, the Fed does not deserve all of the blame, since fears about a further decline in BTC have been growing for weeks, with most of the conversation centred on the impending death-cross and what it implies for Bitcoin’s future.

Today’s selling pulled Bitcoin price below the crucial $36,000 support, leading traders to forecast $32,500 as the next stop before Bitcoin revisits the swing low at $30,000.

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BTC/USDT 4-hour chart. Source: TradingView

These technical factors, combined with negative news headlines such as Chinese authorities shutting down cryptocurrency miners or the most recent “rug pull” on the Iron Finance protocol, which saw cryptocurrency proponent and billionaire investor Mark Cuban lose money, have traders concerned about the current Bitcoin price drop.

Crypto Fear and greed index. Source: Alternative.me

As a result of these concerns, the crypto Fear & Greed Index has dropped to 25, registering extreme fear and continuing the trend of the past month.

Inflows to exchanges spiked before the sell-off

According to statistics from the on-chain data research firm CryptoQuant, BTC netflows to exchanges offered some forewarning to observant traders ahead of last week’s decline from $41,000 to $36,000. A spike in BTC inflows to exchanges occurred on June 15 when the BTC price reached $41,300 before falling by 15% over the next three days.

All exchanges netflow of Bitcoin. Source: CryptoQuant

One observant analyst has pointed out that whale activity on the Gemini cryptocurrency exchange, in particular, has a noticeable correlation with some of the larger sell-offs experienced by the cryptocurrency market in 2021.

With Bitcoin netflow to exchanges levelling out over the last several days, with inflows just slightly exceeding outflows, market players are now waiting to see which direction the price will go next as the feared death cross approaches.

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Smart money continues to amass.

While investor concerns are growing, and some traders who purchased between the March and May highs are selling at a loss, the overall quantity of Bitcoin owned by long-term holders continues to rise after reaching a low in the middle of May.

 

Total Bitcoin supply held by long-term holders. Source: Glassnode

According to crypto Twitter analyst William Clemente III, recent on-chain data shows that BTC has been oversold and is now “sitting on historically important inflection points for major on-chain indicators.”

Long-term holders, according to Clemente, “continue to scoop up discounted BTC,” which has helped balance selling by short-term investors, and he noted that “accumulation is growing stronger.”

Overall, the short-term future for BTC remains risky as previous instances of a death-cross have been followed by a retracement that is similar “to the retrace that preceded the crossover,” according to cryptocurrency analyst and trader Rekt Capital.

Bitcoin retracement after 2019 death-cross. Source: Twitter

On the other hand, the longer-term data hints at a more optimistic future because whale wallets and long-term holders continue to increase their Bitcoin balances.

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