Let’s examine the insights shared by our Technical Analyst at UseTheBitcoin as he walks us through his personal trading approach and observations on the crypto market.
Bitcoin Could Drop to $45,000, Warns 10x Research
Bitcoin has been through a rollercoaster of price movements this year. And now, a new forecast from 10x Research, a company specializing in analyzing digital assets for traders and institutions, is raising concerns for casual investors and seasoned traders. According to the research firm, Bitcoin could see a significant price drop, possibly falling as low as $45,000 shortly. But what’s behind this prediction, and why are experts sounding the alarm?
In their latest report, 10x Research highlighted several reasons why they believe Bitcoin’s price is at risk of a major downturn. First, the entire crypto market is going through a phase of correction and heightened volatility. This means that prices are swinging up and down more than usual, and Bitcoin is caught in the middle of this turbulence. It’s important to remember that Bitcoin doesn’t exist in a bubble—when the broader crypto market is struggling, Bitcoin often feels the pressure, too.
What’s Happening With Bitcoin Activity?
Markus Thielen, the Head of Research at 10x Research, points to a concerning trend in Bitcoin’s network activity. One of the key indicators that analysts look at is the number of active Bitcoin addresses—basically, how many people are using or trading Bitcoin at any given time.
Back in November 2023, Bitcoin’s active addresses hit a peak, with over 983,000 users. At one point, this number even reached 1.2 million! But here’s the catch—after this surge in activity, the number of active addresses started to drop significantly in early 2024.
According to data from Messari, by September 2nd, 2024, the number of active Bitcoin addresses had fallen to just under 600,000. That’s a massive decline in a relatively short period.
So, what does this mean? Well, fewer active addresses could indicate a reduction in overall interest and demand for Bitcoin. When fewer people are using or trading Bitcoin, it can lead to lower prices as demand weakens.
This trend is worrying because it suggests that Bitcoin’s popularity might be fading for now, at least in the short term. And remember, Bitcoin’s value is driven largely by supply and demand. If demand is dropping, the price often follows.
Short-Term Holders Are Selling
Another red flag that 10x Research points to is the behavior of Bitcoin holders. According to their analysis, short-term holders began selling off their Bitcoin in April 2024. At the same time, long-term holders, who typically hold onto their Bitcoin for longer periods, have also started taking profits. This combination of selling pressure from both short-term and long-term holders is usually a sign that the market might have reached its peak and could be heading for a decline.
Bitcoin Price Drops From $73,000 To $55,000
It’s no secret that Bitcoin has seen a significant price drop this year. After reaching an all-time high of over $73,000 in March 2024, the price of Bitcoin has since fallen to around $55,000, as reported by CoinMarketCap. This downward trend is happening simultaneously with the drop in active addresses and the broader volatility in the crypto market, suggesting that all of these factors are interconnected.
How Does The US Economy Play A Role?
10x Research also notes that the weak US economy plays a role in Bitcoin’s struggles. Economic conditions in the US are a big factor in how Bitcoin performs globally because many investors look to Bitcoin as an alternative when traditional markets like stocks are doing poorly. However, with the US economy facing challenges and ongoing Bitcoin futures liquidations, it’s adding more downward pressure on Bitcoin’s price.
September: A Historically Tough Month For Bitcoin
Finally, let’s talk about timing. Dan Tapiero, the founder and CEO of 10T Holdings, weighed in on the situation and shared some historical context.
According to Tapiero, September has often been a difficult month for Bitcoin. Historically, it’s a month where Bitcoin has underperformed or faced increased selling pressure.
It seems that this September is no exception, with Bitcoin and Ethereum being stuck in what he calls a “painful consolidation” since March.
Is There Hope For A Rebound?
Despite the gloomy short-term outlook, there’s still hope for the long term. While Tapiero acknowledges the tough times Bitcoin is going through right now, he believes the market is setting up for a major bullish trend.
His advice to investors? Stay patient and hold onto your assets—the term “HODL,” popular in the crypto world, means exactly that: Hold On for Dear Life.
Final Thoughts
In conclusion, while 10x Research’s prediction of Bitcoin dropping to $45,000 might sound alarming, it’s important to understand the reasons behind this forecast. Fewer active users, selling from both short-term and long-term holders, declining prices, ETF outflows, and the struggling US economy are all contributing to this potential downturn. However, as we’ve seen in the crypto space many times, what goes down often comes back up. So, while the short-term outlook might be bearish, there’s still hope for a recovery in the future.
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