Bitcoin recently surged to test the $28,000 level once again, marking a nine-month high. Despite the bullish momentum, there are warning signs that suggest caution is needed, as the influx of BTC into exchanges and rising mining costs could impede further price gains.
Miners can slow down the BTC rally
The increasing cost of mining Bitcoin has the potential to slow down the rally, as miners could be forced to sell some of their holdings to offset previous losses.
This is particularly relevant as, according to MacroMicro analytics platform, the average cost of mining BTC has accelerated in recent weeks.
In the last 30 days, the cost of mining has peaked at $33,000 per block, while the exchange rate has only been able to strengthen to $28,500, resulting in a discrepancy that has accumulated losses for miners.
Despite the recent increase in BTC’s value, on-chain indicators suggest a potential pullback to the $24,500 level.
Although there was a brief moment on March 18 when the cost of BTC surpassed the cost of mining, the surplus may evaporate as more miners enter the market to take advantage of the cryptocurrency’s price hike.
Given that miners hold about 10% of the total BTC in circulation, their selling pressure could significantly affect the cryptocurrency’s rate. As such, it is important for bulls to exercise caution, as the current upward trend in BTC could be short-lived.
Inflow of coins to exchanges
The recent uptick in the net inflow of bitcoin to trading platforms could be a cause for concern.
Leading blockchain analytics resource Glassnode reports that there has been a notable increase in BTC deposits to exchanges over the past seven days, surpassing the outflow of coins from trading floors.
During this period, the number of bitcoins held at exchange addresses has consistently risen from 3,895 BTC as of March 13 to 36,700+ BTC as of March 19.
Typically, a continued influx of bitcoin into exchanges indicates that hodlers are preparing for short-term trading or profit-taking opportunities. If these assumptions prove true, such sales may trigger a pullback in the BTC rate in the coming weeks.
It is important to note that such market dynamics are not unusual, and that it is common for traders and investors to take profits during bullish market phases.
However, the magnitude and frequency of such sell-offs can have a significant impact on the cryptocurrency’s price.
As such, it is important for investors to keep a close eye on market trends and exercise caution when making trading decisions.
While the overall outlook for bitcoin remains positive, market volatility and potential sell-offs underscore the importance of taking a long-term perspective and adopting a diversified investment strategy.
BTC forecast: dive below $25,000 possible
IntoTheBlock’s IOMAP statistics suggest that Bitcoin’s next target could be around the $24,500 mark.
This metric monitors addresses that are nearing their break-even point, and historically, many hodlers tend to sell when Bitcoin reaches its average buy price.
As of March 20, more than 72% of Bitcoin hodlers were in a profitable position, which could lead to significant profit-taking.
In the event that Bitcoin experiences a bearish trend, the first level of support could be around $27,000, where 307k addresses have purchased a total of 364k coins.
However, if this support level fails to hold, the price may drop sharply to the $24,500 mark. This level is of particular significance, with about one million addresses having bought roughly 360 thousand coins.
However, the bearish forecast could be invalidated if Bitcoin manages to break through the $29,500 resistance level.
This level is significant because 345,000 addresses have previously purchased 130,000 BTC coins. If this level is broken, it could trigger a rally towards $32,000, where a cluster of 237k addresses may want to sell some of their 74k BTC.