Bitcoin Slides Below $27K, Experts Eyeing on Further Downturn

Bitcoin traders were caught off guard. The largest cryptocurrency temporarily dipped below $27,000 for the first time in more than two weeks, amid fears that reduced involvement from institutional market makers may lead to more dramatic price fluctuations. 

In early afternoon trading in New York, the digital currency fell almost 5% in a matter of minutes, wiping away an earlier gain. It was down less than 1% to $27,460 after briefly breaching the lower end of the $30,000 to $27,000 band in which it has been trading for the last month. 

According to Kyle Doane, a trader at Arca, the decrease on Wednesday was likely exacerbated by the suspicion that the US government is moving substantial amounts of Bitcoin. Some dealers were concerned that Bitcoin would be poured onto the market when demand was low. Let's focus on some on-chain movements of Bitcoin and BTC's price action.

Bitcoin's Declining Exchanging Holdings

According to the crypto analytics platform Santiment, the quantity of bitcoin held on digital asset exchanges has lately dropped below 6%. The statistics were last so low in December of 2017.

The impact of FTX (one of the leaders in its sector previous to its collapse) exacerbated the lack of faith in centralised systems. Binance has also experienced an increase in Bitcoin withdrawals in recent months, indicating that many users choose self-custody to a third-party custodian.

The quick transition from caretakers to self-custody systems began in early 2022 and persisted for many months. After November of last year, the quantity of BTC stored on centralised systems fell by less than 7%. 

Bitcoin's Transaction Fees Hike: Another Reason for Declining BTC

Individuals now "prefer moving their transactions through stablecoins like USDT, while folk with low volume transactions now prefer lightning network transactions over base layer transactions," according to Heritage Falodun, founder of Africa-focused over-the-counter liquidity provider Digioats.

The huge spike in transaction costs is attributed, at least in part, to the introduction of ordinals on Bitcoin, a protocol that permits the production of non-fungible tokens and BRC-20 tokens on the Bitcoin network, which are related to some memecoins.

All these ongoing events led to a shift of volume from BTC to other Pump and Dump coins which is why Long-term holders are only left in the BTC market.

Bitcoin Price Analysis

Bitcoin (BTC) is currently trading at $27,540.86, with a 24-hour trading volume of $22,991,667,471. This indicates a 0.05% gain in the previous 24 hours and a -4.93% decrease in the last seven days. Bitcoin has a market valuation of $533,469,000,130 and a circulating supply of 19 million BTC.

On a daily basis, Bitcoin price research reveals that BTC has been consolidating above the $27,700 mark. The MACD is showing a bullish crossing with growing histogram values, while the RSI is trading at 42. If the bulls can recapture levels closer to $29,000, BTC might return to $30k in the near future.

BTC produced a bearish divergence pattern with the RSI indicator on the daily chart, indicating a likely negative correction. The Stochastic RSI has begun to roll over and is now trading in the negative zone, implying that BTC is on the verge of resuming its decline to $26,000. A daily candle closure below $27,000 would indicate a bearish reversal, and BTC prices might fall down to the $25k mark.

Source: TradingView

Conclusion

In conclusion, Bitcoin is facing a sluggish movement currently due to high network fees and declining exchange holdings. Overall, the technical indicators are a bit bullish as lower prices could attract impactful investors.