As Bitcoin (BTC) continues its price consolidation around the $76,000 level, one key indicator is predicting that the top cryptocurrency by reported market cap may form a bottom around the range-low between $69,500 and $70,500.
Bitcoin HODL waves gives hint of cycle bottom
CryptoQuant analyst Sunny Mom analyzed the Bitcoin HODL waves indicator, saying that BTC is likely to form its bottom for the ongoing market cycle somewhere between $69,500 and $70,500.
For the uninitiated, the Bitcoin HODL waves indicator is used to identify spot market tops and bottoms by observing how different cohorts hold their supply.
Usually, the market tends to top when the proportion of short-term holders (STH) – those who have held BTC for less than six months – spikes dramatically. This indicates high investor turnover and an overheated market.
Concurrently, the long-term holders (LTH) bands shrink significantly, as these investors – also called “smart money” – sell their holdings.
On the contrary, the market tends to bottom when the STHs hit a floor, while the LTH bands expand. During such phases, the market enters a quiet mode as no one wants to sell, and the underlying asset’s supply starts to age. These are all the hallmarks of a classic bottom accumulation.
According to the following chart, the current cycle differs from the previous ones in that the LTH base is much higher right now. This is evident from the blue and purple bands, which are noticeably thicker, reflecting growing institutional adoption of BTC.
A quick push to $88,000 is possible
Adding, Mom remarked that unless BTC breaks below heavy volume support – currently around $70,700 area – the most likely scenario is for it to range between $70,000 to $82,000.
As of Tuesday, if BTC is able to reclaim $80,000 and the 200-day moving average (MA), then a quick push toward $84,000 to $88,000 may be on the horizon. However, if momentum fades, then a retracement to $71,000 is possible.
As the STHs sell BTC over the past few months, OTC trading data indicates that whales are quietly accumulating the cryptocurrency at record levels. This pattern aligns with signs of late-phase accumulation phase, which precedes a breakout to the upside.