Bitcoin On-Chain Analysis – Investors Buy Dip amid Intensified Supply Shock


  • Long-term investors keep their hands strong amid the recent BTC price decline.
  • Bitcoin witnesses intensified supply shock.
  • Despite the recent plunge, small position addresses (0.01 to 1BTC) are growing.

Bitcoin long-term investors have been rock-solid regardless of the sudden slump on 7 September. Moreover, the flagship crypto sees a plunging supply shock as exchanges witness a steady decrease in BTC amount.

Addresses with varying BTC values illustrate the Bitcoin network organic growth. Most of these addresses have increased amid the current BTC decline. According to the on-chain data, overleveraged derivatives investors contributed to the current price movement.

Bitcoin Price Action

Last week, BTC attained a local high at $52,956 over the 0.618 Fibonacci retracements on 7 September. However, the leading crypto suffered a flash crash on that same day, plunging towards $42,900. The 19% sudden drop followed the liquidation of long positions amounting to $4 billion.

However, Bitcoin rebounded shortly after the decline, currently hovering around the $46,000 mark. Meanwhile, higher intervals technical indicators have started noting a bearish outlook regardless of the near-term price rebound.

Keep in mind that the sudden price loss validated the long-term zone at the 0.382 Fibonacci retracements as a support area. This region coincides with BTC’S ATH on 8 January 2021 and the horizontal support zones.

Investors Buying the Dip

On-chain data can indicate the behavior of investors during the dramatic BTC drop. It shows that most investors holding actual Bitcoin didn’t register significant moves as the market saw a sudden crash. @woonomic on-chain analysts concluded this, tweeting that buyers activated their action regardless of the sell-off in leveraged markets. Moreover, the analysts compared the current plunge to the March 2020 plunge by the COVID pandemic.

Woo stated that the Bitcoin flash plunge comes from deleveraging. He further confirmed that the previous pandemic crash was identical since derivatives overreacted and investors supported the market actions. However, the recent flash crash was dramatic and divergent.

The analyst’s chart supported his statements as it indicated magnified supply chain shock on many levels – long- and short-term positions and the outflows in the stock market. Woo concluded that cheap coins affected the recent decline.

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