Disclaimer: This article contains technical analysis, which is a methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. The content presented in this article is the opinion of the author. None of the information you read on CryptoSlate should be taken as investment advice. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own diligence and consult with a financial advisor before making any investment decisions.
Over $20 billion have been wiped off Bitcoin’s market cap in the last few days. The flagship cryptocurrency went from trading around $8,000 on Wednesday to a low of $6,800 today. As the sell-off continues, IntoTheBlock believes that several blockchain analytics factors can explain this drop. Meanwhile, CryptoSlate takes a technical approach.
Bitcoin blockchain analytics
In a blog post, the chief technical officer at IntoTheBlock, Jesus Rodriguez, explained different blockchain patterns, based on the company’s statistical models, that portray an idea about the downturn in the market and where it could be heading next. He stated that blockchain activity could provide insights about what is currently happening and offer clues about the near term future.
According to Rodriguez, the “In/Out Money” model considers the distribution of Bitcoin throughout individual wallets based on the current price. Based on this representation, there are 1 million addresses with balances between $6,600 and $7,350 containing 730,000 BTC, which could serve as support. But, if the sell-off continues, the next significant level of support sits around $4,200 and $6,600, with over 3.6 million addresses carrying nearly 2 million BTC.
On the upside, there is a certain level of resistance between $7,350 and $7,970, since 1.4 million addresses are holding 941,000 BTC.