Bitcoin spiked above the ascending channel pattern on November 9, but higher levels saw profit-taking.
Bitcoin price is about to reach the dream of $40,000 this weekend, accompanied by a significant change in on-chain data. There is notable hesitation among investors to part with their Bitcoin holdings, leading to an increase in illiquid supply.
Consequently, as holders continue to accumulate Bitcoin, purchasing confidence strengthens in anticipation of potential price increases.
Investors Buy BTC as NVT Shows Cheap Zone
Bitcoin is currently witnessing an accumulation phase as it tests the patience of buyers in the $37,000 to $38,000 zone. Data from Glassnode reveals that the illiquid supply of Bitcoin continues to rise and has recently reached an all-time high. This metric, which tracks the amount of Bitcoin held in wallets that rarely make sales, has reached a new high of 15.4 million BTC.
Rising this metric often correlates with higher withdrawals from exchanges, indicating the tendency of investors to transfer their Bitcoin into personal custody. Since May 2021, there has been a notable increase of over 1.7 million BTC being withdrawn from exchanges, thus strengthening buying confidence as investors accumulate BTC in anticipation of a rise.
Furthermore, on-chain data indicates that Bitcoin’s $37,000 zone remains cheap. the NVT ratio continues to decline. IntoTheBlock reveals a sharp decline in the NVT (network value to transaction) ratio as it fell from a high of 123 to 44.
This decline is due to Bitcoin transaction volume growing faster than the price increase. Typically, increased activity on the Bitcoin network suggests a positive market outlook. The fact that this network activity exceeds the rate of Bitcoin price increase suggests that Bitcoin may be undervalued.
The NVT index is an indicator that compares the market value of Bitcoin with its trading volume. It is calculated by dividing Bitcoin’s market capitalization (its price multiplied by the number in circulation) by the sum of Bitcoin moved between wallets.
What’s Next for the BTC Price?
Bitcoin’s current trading pattern, a slightly ascending channel, suggests a bullish attitude among investors. Currently, buyers are trying to validate a clear move above $38,000 as BTC faces minor selling practices.
Currently, BTC price is trading at $37,344, rising over 2.4% in the last 24 hours. Bitcoin’s 4-hour price chart reveals that the slowly rising 20-day exponential moving average (EMA) and an overbought Relative Strength Index (RSI) hint that a new uptrend could be the path of least resistance.
A push above the $38,000 level could indicate a bullish rally towards the $40,000 level. Conversely, a drop below the 20-day EMA may indicate profit-taking by current holders, which could see the price fall to support levels of $34,000 and possibly lower to $32,700. However, buyers are likely to defend these levels as further accumulation is anticipated.
The Relative Strength Index (RSI) has been trading in the overbought zone for the past few days, indicating that the bulls have maintained buying pressure. If the current bounce holds, buyers will try to push the BTC/USDT pair to $40,000 again.
On the contrary, if the price falls back within the channel, it will indicate that the market has rejected the higher levels. That could take the price to the 20-day exponential moving average ($34,240), an important level to watch. A break below this level will tilt the short-term advantage in favor of the bears.
By Audy Castaneda
