BTC Corrects While ADA Investors Take Profit
The price of Bitcoin (BTC, Tech/Adoption Grade “A-”) has made another move down to $44,000. The next strongest level of support is $42,000. But this is where many investors want to buy, so chances of touching or breaking it are low.
To put it simply, we’re quite possibly going towards the $42,000 level, but it may be front-run by those buying in the $42,000-43,000 zone.
Meanwhile, Cardano (ADA, Tech/Adoption Grade “B-”) investors are taking profits, as expected, after the long-awaited smart contracts launch. ADA is down 23.5% since reaching its all-time high 11 days ago.
Now, when the fear of missing out (FOMO) related to the launch of Cardano’s smart contracts is over, the next leg up will depend on results related to decentralized application (dApp) deployments and performance.
But will this correction last for long? It doesn’t seem likely.
A week ago, we saw the largest long liquidation cascade since the May 19 drop, due to high funding rates and overleveraged positions.
Cascade liquidation is when one trader’s forced liquidation sale triggers the next trader’s stop-loss and so on.
• This event has wiped out billions in open interest and long BTC positions, causing a market-wide correction. But these short-term pains are nothing compared to long-term bullishness.
Ninety-three percent of Bitcoin's supply hasn't moved in at least a month, which is unprecedented. It’s one of the metrics that shows how bullish supply dynamics are.
We’re approaching a zone that’s historically caused a supply shock effect in the market due to long-term investors locking up a substantial portion of BTC.
Yes, there are very few BTC (as well as ETH) on exchanges available for purchasing. And there will be less and less as the time passes.
According to Glassnode data, long-term holders now own 79.5% of the BTC supply. And while many coins changed hands during the recent consolidation in the $29,000-$40,000 range, BTC purchased in Q1 to Q2 2021 remains tightly held with large investors unshaken by recent drawdowns.
And now looks like a good time for those that want to use September’s correction to accumulate more.
Notable News, Notes and Tweets
• MicroStrategy (Nasdaq: MSTR) has purchased an additional 5,050 Bitcoin for $242.9 million. Their total investment in the King of Crypto now exceeds $3.1 billion.
• El Salvador to exempt foreign investors from tax on Bitcoin price gains. "There will be no taxes to pay on either the capital increase or the income."
On-chain data shows the selling is mostly done by those who bought recently, while whales and long-term holders are accumulating more during dips. This is more good news.
During the correction, we are seeing some altcoins pop whenever BTC calms down, and they will continue to do so during September. These select altcoins are mostly Layer 1/Layer 2 smart contract blockchains and other large altcoins … until the parabolic phase when the bullishness will spill over to smaller altcoins as well.
The strongest BTC support level is currently at $42,000, but there’s a chance of seeing a relief bounce or fake rally into the $49,000-$50,000 area before another leg down.
BTC may not be done with dipping just yet, as September is historically a “corrective month.” But I expect it to become very, very bullish during October and November. Stay put.