Bitcoin Stabilizes at Critical Support After Major Crash

  • Bitcoin price finds support near the 200-day EMA near $60,000; a solid close below will indicate an upcoming decline.
  • A report from BlackRock shows that Bitcoin has generally performed better than gold over the long term during times of geopolitical tension.
  • Ki Young Joo, founder and CEO of CryptoQuant, explains that BTC whales are unlikely to sell now.

Bitcoin (BTC) is trading slightly lower on Thursday after falling more than 7% this week and holding near a critical support level; A sustained close below this threshold could signal further declines. However, BlackRock data shows that Bitcoin is outperforming gold over the long term during geopolitical tensions, and Ki Young Joo, founder of CryptoQuant, suggests that BTC whales are unlikely to sell now.

Bitcoin has performed better than gold over the long term

In the short term, Bitcoin may behave like traditional risk assets. However, a report from BlackRock last month found that BTC has demonstrated greater resilience during periods of geopolitical tension than gold over the long term.

The table below shows that in the face of major geopolitical events, Bitcoin’s 10-day and 60-day returns have generally outperformed gold and the S&P 500 US stock index.

Moreover, according to a report from Glassnode, the recent fourth Bitcoin halving has reduced Bitcoin’s stable issuance rate to 0.83%, which is lower than gold’s roughly 2.3%. This marks a historic shift in the naming of the scarcest asset.

Bitcoin and gold inflation chart

Bitcoin and gold inflation chart

A QCP Capital report released on Wednesday highlights the global financial market’s reaction to rising tensions in the Israeli-Iranian conflict. However, the risk reduction in TradFi assets was minimal. The US S&P 500 index closed 1% lower, while West Texas Intermediate (WTI) crude oil prices closed 2% higher.

However, QCP’s analysis shows that the cryptocurrency market is experiencing great volatility. Bitcoin fell 4% and found support near the $60,000 mark. QCP predicts that further escalation could push Bitcoin prices lower, potentially down to $55,000.

“The geopolitics of the Middle East will remain in focus for now, but the slight sell-off suggests the market remains well-positioned in risk assets. This small setback should not distract from the big picture.” the report says.

Moreover, the report shows that China’s political actions and economic situation resembled that of Japan in the 1990s. To combat deflation in Japan, the Bank of Japan (BoJ) cut rates, introduced negative interest rates, and began a then-innovative quantitative easing program.

Likewise, recent policies by the People’s Bank of China (PBOC), such as rate cuts and quantitative easing programs, are likely to support asset prices in China. Such bullish sentiment could potentially spread globally and support risk assets, including cryptocurrencies.

Additionally, sentiment data indicates that recent conflicts between Iran and Israel have led crypto communities and traders to increasingly seek out war-related topics, potentially increasing fear of missing out (FOMO) and fear, uncertainty and doubt ( FUD) on the crypto market. investors.

Sentiment Chart

Bitcoin whales are unlikely to sell

Ki Young Joo, founder and CEO of CryptoQuant, a data and analytics company, posted on X that new Bitcoin whales are actively accumulating and explained that these holders are neither exchange nor miner wallets and have no outflows; These are mainly custodial wallets.

Young said: “The real whales move the market through spot trading and over-the-counter markets. This is why on-chain data is critical. “The older whales have not made particularly strong returns, and the whales that have entered this recent bull run have barely made any profits.”

He goes on to explain that the new whale wallets, primarily custodial wallets and ETFs, have not yet generated enough profits, so they are unlikely to sell BTC on exchanges until liquidity from retail investors begins to flow.

BTC balance chart

BTC balance chart

BTC New vs Old Whales Unrealized Profit Ratio Chart

BTC New vs Old Whales Unrealized Profit Ratio Chart

BTC found support near the 200-day EMA

Bitcoin price found support near the 200-day exponential moving average (EMA) at $59,891 on Wednesday after being down 8.2% since Sunday. As of writing Thursday, it is hovering just above $60,300.

Momentum indicators such as MACD are signaling weakness in Bitcoin, showing a bearish crossover on Tuesday. The MACD line (blue line) crossed the signal line (yellow line), giving a sell signal. Moreover, it also shows rising red histogram bars below the zero neutral line, suggesting that Bitcoin price may be experiencing downward momentum.

If BTC closes below the 200-day EMA at $59,891, it could decline nearly 4.6% from current trading levels and retest the September 18 low of $57,493.

BTC/USDT daily chart

BTC/USDT daily chart

However, if BTC rises and closes above the $62,000 level, it could resume its rise and retest its next resistance at $66,000.

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