Bitcoin is currently undergoing bout of sideways trading, thereby offering little insight into its mid-term outlook.
According to new data, a limited number of market participants have been influencing the cryptocurrency’s price action since the beginning of this year. Hence, this could be the reason Bitcoin trading has been between $9k and $10k within the past six weeks.
An analytics company noted that only 27 percent of Bitcoin’s circulating supply has moved this year, while the remaining 73 percent has been dormant. However, Bitcoin’s fundamental factors have started growing, possibly paving the way for more upsides in the coming weeks and months.
“Speaking of HODLing… Only 27% of the circulating #Bitcoin supply has moved in 2020. That’s right, 73% of all bitcoins in existence (~13.5M $BTC) have been dormant since 2019 and before.”
Investor sentiment has become weak due to Bitcoin’s multi-week bout of consolidation, thereby prompting forecast of breakdown and beginning of a new downtrend. Such forecasts are based on the triple top at $10.5k that is active at the moment, the consecutive rejections at $10k, and the lower highs attained many times.
An indicator suggests Bitcoin’s growing fundamental health when it was consolidating, signaling the possibility of its immediate movement to favor the bulls. The indicator known as Glassnode’s Compass developed by the research company Glassnode shows that Bitcoin has been slowly transitioning into bullish area over the previous several months.
“For the fifth week in a row, the compass is in Regime 1, representing a bullish state for the market and for on-chain activity. GNI and bitcoin’s price trend both slipped slightly from the previous week, but still remain firmly in the green zone,” they explained while pointing to the graphic seen below.
The analytics company also explained that the cryptocurrency’s stable position within the green area signals a positive outlook in the mid-term.