Bitcoin has seen a significant increase in the exchange of idle tokens, which may lead to high volatility. The supply of ETH on exchanges has decreased, while prices are in the “opportunity zone.” If these on-chain metrics remain stable, BTC and ETH could soon resume their upward trend.
As several on-chain metrics indicate that buying pressure is increasing, Bitcoin and Ethereum appear destined for high volatility. Still, these cryptocurrencies must overcome one hurdle before they can resume their upward trend.
Bitcoin Whales Have Returned
Bitcoin and Ethereum may be on the verge of a bullish surge.
Bitcoin has made a strong comeback after falling below $41,000 earlier today. Following the steep correction, the leading cryptocurrency was able to gain over 3,500 points, reaching a high of $43,750 at the time of writing.
As prices fell, Santiment’s Token Age Consumed index recorded a significant increase in idle BTC now exchanging hands in the last few hours.
This on-chain metric counts the number of coins that have recently moved addresses multiplied by the number of days since the last time they moved. Although the movement of old tokens is not always a leading price indicator, it has caused volatility spikes in recent months.
Based on recent token movements, Bitcoin may experience additional volatility if history repeats itself.
The behavior of whales suggests that the upcoming spike in volatility may be to the upside. Wallets on the network with 100 to 10,000 BTC have added more than 80,000 BTC to their holdings in the last 24 hours, totaling $3.32 billion.
The sudden increase in upward pressure indicates that large investors are attempting to buy at a discount in anticipation of an upswing.
Despite the fact that the odds appear to be in favor of the bulls, Bitcoin faces significant resistance in the near future. According to the IntoTheBlock In/Out of the Money Around Price (IOMAP) model, 1.2 million addresses previously purchased 1.05 million BTC between $43,150 and $45,670.
As prices attempt to advance further, these holders may be attempting to break even on their underwater positions, containing the upward pressure. As a result, only a decisive daily candlestick close above this supply barrier could indicate the start of a new uptrend.
The IOMAP cohorts, on the other hand, show that the most significant support wall beneath Bitcoin is located between $41,830 and $43,000. Approximately 760,000 addresses hold nearly 430,000 BTC at this price level. Slicing through this demand zone could result in a drop to $39,000 because there is no other interest area that could keep prices from falling.
Ethereum appears to be undervalued.
The number of Ethereum tokens held on cryptocurrency exchanges is steadily declining. More than 1.35 million ETH have been depleted from trading platforms in the last month alone, representing a 6.63 percent decline.
The decreasing ETH supply on well-known cryptocurrency exchange wallets bodes well for Ethereum’s future price growth. It technically reduces the amount of ETH available for sale, thereby limiting the downside potential.
Furthermore, the Market Value to Realized Value (MVRV) index suggests that Ethereum is currently undervalued. This fundamental index calculates the average profit or loss of addresses that purchased ETH in the previous month. When the 30-day MVRV falls below 0%, a bullish impulse usually follows.
The 30-day MVRV ratio is now hovering around -8.6%, indicating that ETH is in the “opportunity zone.” The lower the MVRV ratio, the greater the likelihood of an upward price movement.
Although Ethereum is sitting on top of shaky support, transaction history shows that it only needs to overcome one hurdle to resume its upward trend.
More than 1.2 million addresses have received approximately 8.6 million ETH worth $3,185 to $3,275. A decisive candlestick close above this resistance level could catapult ETH to $4,000 or new all-time highs.
Nonetheless, investors should keep a close eye on the $2,900 support level, as any signs of weakness in the area could prompt market participants to sell. Ethereum could fall to $2,500 in such unusual circumstances.