The first big pullback since mid-October 2023

In yet first significant pullback since mid-October 2023, Bitcoin shed about 9% of its value in the past three days (with much of the decline coming overnight). In the process of doing so, it retraced almost to the 20-day SMA, which often coincides with corrections of the main trend. Despite that, there are a few developments that stand out to us. First, the RSI and ADX are forming divergence on the daily chart. Second, there has been a modest decline in the number of Bitcoin addresses with balances exceeding 1,000 BTC (since around 5th December 2023 when Bitcoin was erupting to new highs); the same applies to addresses with holdings exceeding 100 BTC. We previously outlined the possibility of this happening and noted that it would be worrisome since a similar dynamic played out around April 2023 and July 2023 (at particular peaks in Bitcoin’s price). We will monitor the mentioned developments in the following days but for now, we still prefer to stay on the sidelines. We will announce once our stance changes.

Illustration 1.01

Illustration 1.01 portrays the daily chart of BTCUSD. The yellow arrow highlights Bitcoin’s retracement toward the 20-day SMA, which often acts as a correction of the main trend. We will pay close attention to this level because if it fails to hold the selling pressure, it will raise the odds of a bearish crossover between the 20-day SMA and 50-day SMA (and potential trend reversal).

Illustration 1.02

Illustration 1.02 shows the divergence between the price and the RSI (on the daily chart).

Technical analysis gauge
Daily time frame = Bullish (losing momentum)
Weekly time frame = Bullish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of multiple indicators.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor or any other entity. Your own due diligence is highly advised before entering a trade.

Comment:

With the quick pullback in the price over the past two days, the number of Bitcoin addresses with balances exceeding 100 BTC and 1,000 BTC slightly increased (potentially hinting at big players buying the dip). Interestingly, this development comes ahead of today's FOMC meeting.