Bitcoin caught between fierce sellers and scarce buyers, $36K incoming?

Bitcoin has taken another downward turn at the time of writing, after going sideways over the weekend. As Coin-Crypto reported in recent days, BTC lost critical support at around $40,000, and it looks like it will continue its downward trend.

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Bitcoin is trading at $38,118 with a loss of 2.6% in the last 24 hours.

BTC trends down on the 4 hour chart. Source: BTCUSD trading summary

As of a recent report from Glassnode Insights, Bitcoin has reached a delicate equilibrium. As the benchmark crypto moves back to annual lows, buyers are trying to absorb bears and establish new support.

However, as the report claims, selling pressure has been “continuous” as speculators dump their BTC, likely as a result of the current macroeconomic environment. This status quo has been maintained for more than two months as short-term investors jump out of the market.

This new normal could break at any time if bulls continue to lose momentum or sellers reach a level of exhaustion. Glassnode Insights added:

As prices have traded sideways in recent weeks, a relative equilibrium has been established. However, given the limited inbound demand for fresh produce, this delicate balance could be upset by a significant degree of seller exhaustion, or vice versa, a new boost from sellers.

In the chart below, it is easier to visualize the above with an equilibrium being created in the amount of Bitcoin held in the crypto exchange platform as the price of BTC moves sideways. This statistic shows a downward trend since March 2020, after the event called “Black Thursday”.

Source: Glassnode Insights

In addition, the report claims that speculators have recorded a total unrealized loss of 15%. The majority of these investors bought around $46,400, and they currently hold their positions at a loss as opposed to long-term holders who have an average purchase price of $39,200. Glass node added:

We can see that there have been non-trivial daily losses for over two months, which is equivalent to about 0.5% of market cap per day. While significant, losses of this magnitude are nowhere near the extreme capitulation levels seen in the 2018, March 2020, or May 2021 bear market.

The most critical level for Bitcoin

In the event of a future downside, Bitcoin may experience a bounce at 3 critical levels. In the short term, $36,000 should hold up to avoid a major decline as there are about $20 million in bid orders at that level.

This support has increased in recent days, as evidenced by data from Material Indicators. At about $35,000, there is another $15 million in bid orders, providing an extra layer of protection against selling pressure. It remains to be seen whether these levels hold up.

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In higher time frames, $29,000 stands as a major psychological price point. During the 2021 downtrend, BTC found support at those levels, and losing it could lead to further losses. Glassnode highlights another important level:

The realized price is currently $24.1k and is the average price of all coins that were valued when they were last moved on the chain. Historically, this has been a very healthy support level for the cycle, and it suggests that the overall market is still holding an unrealized gain of 63%.

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