Bitcoin’s current price of $26,000 has brought on stagnation, and a look at its velocity prompts comparisons to the period preceding the Q4 2020 price breakout. Bitcoin’s on-chain activity is reminiscent of the time before its surge to all-time highs in 2021, suggesting both positive and negative implications.
Bitcoin’s velocity, which measures the movement of BTC units across the network, has hit multiyear lows, as revealed by Ki Young Ju, CEO of CryptoQuant. This status quo, with Bitcoin holders reluctant to move their holdings, can be seen from two angles.
On the positive side, this could indicate strong holding behavior among whales. On the negative side, it signifies a lack of transfer to new investors, indicating cautious market sentiment. This parallels the narrative that the market is in a “wait and see” mode regarding BTC.
Historically, low velocity has been associated with major price movements. In late 2020, Bitcoin’s rebound in velocity correlated with its breakthrough past $20,000 and eventual all-time highs in 2021. However, the current situation is different. Bitcoin is trading at a comparatively low price of $26,000 and is broadly oversold according to its daily relative strength index (RSI).
Notably, the 12-hour RSI recently hit its lowest level in five years, suggesting that investor interest has yet to fully materialize despite the price stagnation. As with any financial decision, it’s essential to conduct thorough research and consider all relevant factors before making any investment choices.