Bitcoin Velocity Reaches Pre-Q4 2020 Levels, Recalling Previous Price Breakout

Ki Young Ju, the CEO of CryptoQuant, a prominent analytics platform, shared insights on August 25th, pointing out that Bitcoin’s velocity has hit multiyear lows.

Currently, Bitcoin’s movement has slowed significantly at its present price levels. The prolonged absence of a clear price trend has dampened the urgency for traders to make buying or selling decisions.

This stagnation is highlighted by the concept of velocity, which gauges the movement of BTC units within the network. According to CryptoQuant’s analysis, the daily measurements of this metric have now reached levels not seen since October 2020.

Ki Ju offered a nuanced interpretation of this development: “There are two sides to this situation. It can be seen as positive since whales are holding onto it, or negative since it’s not being transferred to new investors.” This points to a lack of substantial trading activity among major investors, contributing to the narrative that the market is presently in a “wait and see” mode concerning Bitcoin.

At the outset of the year, there was visible evidence of new capital entering the market, particularly as BTC/USD embarked on an impressive winning streak in Q1, ultimately surging by 70%.

An interesting parallel lies in the volume data, which holds significance for another reason. Back in late 2020, Bitcoin’s initial ascent past the $20,000 mark and its subsequent journey to new all-time highs were accompanied by a rebound in this metric, following a prolonged period of decline.

However, the current landscape differs in terms of market sentiment. Unlike the previous scenario, Bitcoin’s current RSI (Relative Strength Index) stands at levels indicating an oversold market, according to assessments from TradingView. This suggests that investor interest in Bitcoin has not yet reached its full potential. This sentiment is further mirrored by the 12-hour RSI, which hit a five-year low earlier this month and has yet to show signs of a robust recovery.

As the market navigates these dynamics, it remains to be seen when a renewed surge of investor interest will materialize.

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