While Bitcoin is undergoing a short-term correction right now, not many of the BTC community will complain or lose sleep over it. A period of uncertainty was looming as BTC consolidated below $ 40,000 for an extended period of time, before holding near the $ 30,000 range.
In fact, after three retests at $ 30k, many expected Bitcoin to drop to $ 24k if the support level was further tested. However, 3 weeks later, Bitcoin has managed to increase by 40%. Unfortunately, the importance of that stressful period cannot be stressed enough.
Absorbs pressure, validates circulation?
Before understanding the significance of the $ 30,000 to $ 40,000 range, the narrative needs to be explained from a 2020 perspective. After Bitcoin fell to $ 3,300 in March 2020, the rally to $ 10k was swift and completed before the third halving in May.
However, between June and November, the crypto asset consolidated strongly between $ 10k and $ 20k.
Throughout this period, the selling pressure was absorbed and the buildup began on both the institutional and retail side. During this period, BTC users were able to make an estimated net profit of $ 300 to $ 750 million, and the average value of BTC increased in terms of realized market capitalization.
As for 2021, the situation was remarkably similar. According to Glassnode, the net profit realized between May and July was between $ 1 and $ 1.5 billion. During that time, around 3.6 million BTC had a last spend and their average realized value increased in terms of market capitalization. About 19.2% of the total supply reached a point of stability and absorbed most of the selling pressure.
For context, in January 2021, only 12% of the supply was below a net profit.
Is Bitcoin Stable Above $ 30k Now?
Unless there is another black swan event, Bitcoin is fundamentally strong above the $ 30k limit now. The successful breach of $ 42k can be taken as a confirmation. At press time, market demand was absorbing BTC with realized gains that were of the same magnitude during November-December 2020. After the same, Bitcoin had skyrocketed 3 times.
This is not an inference about the potential for Bitcoin to rise 3 times from its current valuation. Instead, it’s about highlighting the bright side of the $ 30k- $ 40k consolidation that unfolded during the second quarter of the year.
$ 64,000 may be a long way from Bitcoin at the moment. However, there is some technical guarantee that the ecosystem will not receive $ 30,000 anytime soon.
This is a machine translation of our English version.
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