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Bitcoin’s price chart movement has been relatively constrained recently. Even though the market’s king coin has reached $50k for brief intervals over the last three days in a row, it hasn’t been able to break through. In reality, at the time of writing, BTC was trading at $49.8k.
The market’s mood swings
At the time of writing, the on-chain metrics revealed a number of intriguing tendencies. Consider the exchange balance as a starting point. Balance on Exchanges has already slipped below its May lows and is now on par with 2018 levels, as shown in the figure below. In general, the decline in the cumulative exchange balance suggests that market participants have recently purchased Bitcoin.
Interestingly, the market witnessed some solid rounds of buying from whales. These big market participants have added over 41,580 BTC to their HODLings over the past 10 days. When the dots are connected, it becomes fairly clear that whales have been the backbone of the on-going buying spree.
Furthermore, at the time of writing, the situation of most supply shock ratios appeared to be quite inviting. Bitcoin’s illiquid supply shock ratio, for example, has been steadily declining since the end of August. This trend, however, has completed a complete 180-degree shift and has begun to march northward since September 2nd.
The Exchange Supply Shock ratio and the highly liquid ratio have been on the rise since the beginning of this month. A zoomed-out view of the former indicates that it has considerably recovered from its drawdown in April and May. By and large, this underlines the fact that exchange flows are back to their accumulation mode to keep up with the rising demand.
As such, a supply shock is an event that causes a sudden rise or decrease in an asset’s supply. The unexpected change frequently changes the equilibrium price and causes a valuation shift. Prior to this, the Bitcoin market saw a number of supply shocks. Surprisingly, most rallies were initiated by a sudden increase in demand and a concomitant supply dry-up.
Given the rise in demand and the current situation of the supply shock ratios, it is reasonable to anticipate a price increase in the following days. Bitcoin should be able to record a long green candle on its price charts in retrospect. Furthermore, famous analyst Will Clemente made the same point in a recent essay.
“Feels like a massive green candle is coming for Bitcoin soon.”