A closely followed on-chain analyst thinks a deeper drawdown could ultimately end up as the spark that ignites a Bitcoin (BTC) rally to fresh highs.
In a new interview on the What Bitcoin Did podcast, pseudonymous analyst Checkmate says on-chain data suggests that BTC has seen a significant decline in sell-side pressure since April when people unloaded their holdings near all-time highs.
But the analyst says Bitcoin is still having trouble sustaining its uptrend due to the absence of fresh demand.
“The one that we saw in the ETF (exchange-traded fund) peak, about 30% of that was GBTC but not all of it. We saw a lot of people sell that peak. But at the same time, their spending has really backed off.
So in many ways, the bulls should have less work to push us higher. However, we haven’t gone higher. And that’s why we have to be very, very conscious: in theory, we should be able to go higher much easier because there’s less sell-side.
The fact that we’re not is telling us we just don’t have that second wave of demand.”
Checkmate predicts that Bitcoin will see lower levels to find investor interest before it can gather the momentum to kick off the next leg of its bull market.
“Markets usually need a catalyst… What is the number one catalyst? Lower prices. Bitcoin goes down. Eventually, either it’s a flash crash and people step in and buy it like in March 2020, which I’m not saying is going to happen, or you get a bear market floor.
The way to go up is to go down quite often and the market will look for any excuse it can find. Financial media will go out and find like, ‘Look it was Mt. Gox, look it was Saylor…’
They’ll find some reason, but at the end of the day, we haven’t had demand flowing in. We’ve been chopping around doing nothing… At the end of the day, the market went lower because there wasn’t enough to push us higher, and it’s going down until it finds that marginal buyer.
That’s the way markets work: got to go down to go up.”
At time of writing, Bitcoin is worth $60,660.
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