Bitcoin Onchain Analysis as Price Plunges Below $37,000

Key Insights:

• BTC price drops below $37,000 after clocking decent gains in the previous session.
• The crypto Fear and Greed Index has circled back to fear. 
• Further downside can be expected if the price fails to hold the $37,200 support. 

Uncertainty and volatility are the only constants in the crypto market. Yet again, as the top crypto asset’s – bitcoin (BTC) – price took a dive under the crucial $37,000 mark, bulls took the back seat, and bears seemed to rejoice.

$40,000 – now a distant dream?

Amid anticipations of a breakout above the $40,000 mark on May 4, BTC’s price briefly tested the psychological barrier at $40,000. However, those gains were temporary, and May 5 brought a wave of losses for the king coin and the larger crypto market.

After oscillating near the $1.7 trillion mark, the global cryptocurrency market cap fell to $1.69 trillion, noting a 3.90% decrease over the 24-hours from the time of writing.

Notably, in tandem with BTC’s nosedive below $37,000, most of the top altcoins, including ETH, BNB, SOL, and ADA, were painted in red on their daily and weekly time frame.

BTC’s price has been hovering in a very tight range with no meaningful price action, while the top crypto’s price rose sharply amid a retreat in the US dollar and higher stock indices it couldn’t sustain for long.

Analysts pointed out that around $82 million were gone in bitcoin long liquidations in two hours, with almost $63 million in just one hour. The long liquidations in the market were indicative of the bearish wave that seemed to overtake BTC’s charts.

Additionally, the long-short ratio for BTC presented a dominance of shorts in the market, which aligned with the 5.22% loss in price (in 24-hours), at press time.

Bitcoin tested the lowest price level in two and a half months, as the markets still came to terms with the Fed’s 50 basis point rate hike on Wednesday. Now, rate futures price a 75% chance for a 75 basis points hike in June.

At yesterday’s Federal Open Markets Committee Meeting (FOMC), Federal Reserve Chairman, Jerome Powell, announced the first 0.5% interest rate hike since May of 2000, setting future expectations for further 50 basis point hikes later this year.

BTC’s price fell to as low as $36,520. With bitcoin price breaching the lower support at $37,200, the $40,000 mark appeared to be a distant short-term dream for market participants. So, what did on-chain indicators suggest about BTC’s trajectory?

Bitcoin on-chain analysis

The number of active addresses on a network generally indicates network vibrancy; for BTC, change in new addresses and active addresses were negative, denoting few participants entering the market.

The seven-day change in new addresses was -14.95%, active addresses were down by over 10.42%, and zero balance addresses were down by 23.71% over the same time.

Furthermore, before BTC’s dip under the $37,000 mark, a short-term sentiment analysis by Crypto Quant analysts suggested a positive continuation of the current Funding Rate indicating a predominance of long-position traders and a willingness to pay funding to short traders.

Additionally, a sharp increase in Fees per Transaction (Mean) indicated an increase in demand for transfers. However, there was concern about the impact on prices when demand for this transfer calmed down, as the price rebounded below the $37,000 mark.

For now, Global In/Out of the Money for BTC highlighted that bitcoin broke through a crucial support level at $38,670, where 2 million addresses hold over 1 million BTC. In the short term, BTC needs to reclaim $38,670 as support quickly to avoid these addresses from selling some of their holdings as the next critical support sits at $28,500.