Bitcoin (BTC) price grazed $38,000 last week, as the bulls extended the yearly peak by another 7%. On-chain data analysis examines how BTC price could react to the upcoming Consumer Price Index (CPI) data release.
Bitcoin price wobbled below $37,000 on Monday as markets anticipate the next US Inflation data. Will it trigger another Bitcoin price breakout?
Bitcoin Holders Deposited 30,000 BTC on Crypto Exchanges Over the Weekend.
Bitcoin price prospects hang in the balance this week as markets anticipate the official US inflation reports for October 2023. The US Bureau of Labor Statistics is scheduled to release the latest date on the US Inflation and Consumer Price Index (CPI) on Nov. 14.
Currently, the markets have priced in a consensus CPI figure of 307.81. With this slightly higher than the last month’s actual inflation of 307.79, Bitcoin investors have taken on a skittish disposition in the last few days.
In fact, many investors were spotted shifting million of dollars worth of BTC into exchange-hosted wallets over the weekend
CryptoQuant’s BTC exchange reserves data shows that Bitcoin exchange reserves stood at 2.01 million BTC when the price hit $38,000 last Thursday. But as of Nov. 13, it has increased to 2.04 million BTC deposited across different crypto trading platforms and exchanges.
This means BTC holders deposited 30,000 BTC into crypto exchanges over the weekend. Valued at the current BTC price of $36,700, the newly-deposited coins will dilute market supply by approximately $1.1 billion.
The exchange reserves metric depicted above tracks real-time changes in the number of Bitcoin deposited in crypto exchange-hosted wallets. Typically, strategic investors interpret an increase in crypto exchange reserves as a bearish signal.
Firstly, an increase in exchange reserves, as observed above, indicates that many investors are looking to explore short-term selling opportunities.
Secondly, a significant influx of Bitcoin deposits across crypto exchanges and spot trading platforms effectively dilutes the market supply. And without a corresponding increase in Bitcoin market demand, the additional $1.1 billion (30,000 BTC) deposited on exchanges over the weekend could trigger a Bitcoin price pull-back in the coming days.
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Bitcoin Demand Among Corporate Investors Has Reduced Considerably
Bitcoin demand among institutions and corporate entities has slowed significantly over the last few days. This could be attributed to the consensus expectations that this month’s inflation report figures will exceed last month’s.
On-chain data reveals that Bitcoin whale investors have dialed down their trading activity significantly. As depicted in the chart below, Bitcoin recorded only 12,430 whale transactions on Nov.12, which is the lowest for the month.
Whale transaction count is a financial metric that tracks the trading activity of large institutional investors. It sums up the daily number of transactions that exceed $100,000. A decline in the number of whale transactions is a clear indication that large investors are taken on a subdued disposition. This further confirms that investors are taking a neutral stance on BTC ahead of the CPI data release.
Hence, Bitcoin’s current consolidation phase will likely linger if the upcoming CPI data release exceeds the market consensus figure of 370.81.
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BTC Price Prediction: $35,000 Support Level is Vital
From an on-chain standpoint, the slowing whales’ sell-off and massive exchange inflows are major drivers behind the ongoing Bitcoin price pull-back. With these indicators still trending bearish, it puts BTC price at risk of further downside.
The Global In/Out of the Money (GIOM) data, which groups the current Bitcoin holders according to their entry prices, also confirms this bearish forecast.
It however, shows that the bears must break the initial support buy wall $35,000 to remain in control. As shown below, 1.44 million holders bought 448,980 BTC at the average price of $35,100. If those investors HODL firmly, they could trigger an early Bitcoin price rebound.
But if the bears push aside the buy wall, Bitcoin price could retrace toward the $33,000 area.
Still, the bulls could regain control of the market prediction if BTC price can reclaim $38,000 territory. But, in that case, the 1.23 million Bitcoin holders that bought 382,530 BTC at the maximum price of $37,900 could mount a resistance wall. If those investors sell early, BTC price will likely enter another retracement.
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Disclaimer
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