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Bitcoin, Ethereum ready to recover despite losses

The central theses

  • Bitcoin has seen an 18% correction in the past two weeks and is now on stable support.
  • Ethereum whales are slowly re-entering the network as a number of new buy signals emerge in the market.
  • Despite the significant losses that have been incurred recently, both cryptocurrencies appear to be on the verge of recovery.

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Side investors seem to be taking advantage of the recent downturn to re-enter the crypto market. The sudden surge in buying pressure could help Bitcoin and Ethereum prices rebound.

Bitcoin stands above the ultimate support

Bitcoin suffered a significant correction after rising to a new all-time high of $ 61,800 on March 13. Its price fell more than 18% and recently hit a low of $ 50,300. The downturn appears to have been curbed by the 50-day moving average on BTC’s daily chart.

This indicator has played an important role in the price development of Bitcoin since it came into force on October 9, 2020. It has seen one of Bitcoin’s most significant retracements since that date, serving as a rebound point that drove prices to record highs.

Now that BTC is retesting the 50-day moving average, a similar market reaction could occur. The rebound from this level of support could push Bitcoin’s market value to a new all-time high above $ 70,000. To do this, however, Bitcoin would have to overcome a massive supply barrier that lies ahead of it.

BTC / USD on TradingView

IntoTheBlock’s IOMAP (In / Out of the Money Around Price) model shows that the $ 54,800 level represents a significant area of ​​resistance. Over 1.20 million addresses previously bought more than 752,000 BTC at that price.

Therefore, only a daily candle holder that is above this price hurdle will confirm the optimistic outlook.

In / Out of the money at the price of IntoTheBlockIn / Out of the money at the price of IntoTheBlock

It should be noted that further price hikes can prove difficult from an on-chain metrics perspective.

Market participants do not appear to be attracted by the current price trend as the number of new daily addresses on the Bitcoin blockchain is falling. Around 530,000 new addresses joined the network today, down 11.80% over the past week.

This is a negative sign: network growth is often viewed as one of the most accurate predictors of price. As the network shrinks over a period of time, prices usually tend to fall.

New Bitcoin addresses from GalssnodeNew Bitcoin addresses from Galssnode

Unless Bitcoin is above the 50-day moving average, a steeper retreat is likely to be ahead.

The IOMAP cohorts show that the two main areas of support under this cryptocurrency are $ 49,000 and $ 46,200. Given the level of interest rates around these price points, they may be able to prevent BTC from going through a steeper correction.

Buy Ethereum Screams

Ethereum has also suffered losses, down 20% since March 13, dropping to a low of $ 1,540. This could represent a market low as multiple buy signals emerge across the board.

For example, the TD Sequential indicator showed a buy signal in the form of a red nine candlestick on the ETH 12-hour chart. The bullish pattern suggests that if demand for Ethereum rises, the prices for one to four candlesticks could rise. However, if the upward pressure is strong enough, Ethereum could start a new upward countdown.

The buy-signal is confirmed when a green candlestick with two candles starts above a preceding green candle.

SIMETRI Research

So rare

Ethereum US dollar price chartETH / USD on TradingView

The MVRV index (Market Value to Realized Value) also favors the optimistic mood. This fundamental index measures the average profit or loss of addresses that have acquired ethers in the past month. Any time the 30-day MVRV moves below 0% it tends to be followed by a bullish impulse.

The 30-day MVRV rate is now -3.93%, which indicates that ETH is currently undervalued. The lower the MVRV ratio, the higher the buying pressure behind Ethereum.

Ethereum MVRV from SantimentEthereum MVRV from Santiment

As these technical and fundamental indicators turn bullish, big investors seem to be rushing to add more ether to their portfolios.

The distribution table of the owners of Santiment shows that buy orders have been executed behind Ethereum in the last 48 hours.

The analytics company saw a significant increase in the number of addresses with millions of dollars at ETH, known colloquially as “whales”. Addresses with 10,000 to 100,000 ETH are up nearly 0.60%, and around six new whales have joined the network.

Distribution of ETH holders by SantimentDistribution of ETH holders by Santiment

The increasing presence of large ETH owners may seem insignificant at first glance. When you consider these whales hold between $ 16 million and $ 160 million in ETH, the sudden surge in buying pressure can lead to millions of dollars.

If the buying frenzy continues, ETH can potentially move further and hit a new all-time high of $ 2,500.

Disclosure: At the time of writing, this author owned Bitcoin and Ethereum.

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