Understanding Why Bitcoin Prices Remain Stagnant
Introduction
The Bitcoin (BTC) price has been consolidating within a roughly $8,200 range over the last seven days, leaving the elusive $100,000 mark still out of reach. Since dropping from its all-time high of $99,655 on November 22, Bitcoin’s price has been stuck between its resistance level at $99,700 and support at $91,600. In this article, we will delve into the reasons behind the stagnant market.
Demand for Bitcoin Investment Products Stalls
The primary reason for Bitcoin’s price stagnation over the last week is due to the Thanksgiving holiday in the United States and a decrease in flows into BTC investment products. Outflows from Bitcoin investment products totaled $457 million over the week ending November 29. Spot Bitcoin ETFs balances have also been relatively stable since November 25, despite both record inflows and outflows in November.
Flows into Bitcoin Investment Products Decrease
The chart below displays the Net Realized Profit/Loss metric used to assess the hourly change in on-chain capital flows for Bitcoin, measured in US dollars. At present, it can be seen that both profit and loss forces are largely equal, resulting in market equilibrium.
Net Realized Profit / Loss (USD)
| Date | Net Realized Profit/Loss |
| — | — |
| Nov 21 | $1.08 billion |
| Nov 29 | $33 million |
As observed from the chart above, the hourly Net Realized profit peaked at $1.08 billion on November 21 before dropping and plateauing around $33 million in the previous seven days.
Bitcoin Stuck Between Two Trendlines
On December 2, Bitcoin’s price fell below the support provided by the 50-period simple moving average (SMA) at $95,821. However, BTC/USD found support at the 100 SMA, currently sitting at $95,051. This move has now seen Bitcoin’s price rise above the 50 SMA.
BTC/USD Four-Hour Chart
| Date | Price |
| — | — |
| Nov 22 | $99,655 (All-Time High) |
| Dec 2 | $94,111 |
Bitcoin’s price needs to surpass the resistance at $98,200 to break out of the current consolidation pattern. However, it is currently pinned under a relatively stiff barrier, sitting within the $96,422 and $97,111 congestion area.
In/Out of the Money Around Price (IOMAP) Chart
The in/out of the money around price (IOMAP) chart below shows that this is where more than 733,760 addresses acquired approximately 597,620 BTC within this range. This indicates a significant level of buying pressure within this area.
Bitcoin IOMAP Chart
| Date | Price | Addresses Acquired |
| — | — | — |
| Nov 21 | $96,422 | 733,760 |
| Nov 25 | $97,111 | 597,620 |
On the downside, the 100 SMA at $95,051 is within the $92,876 and $95,736 buyer congestion zone. This zone now provides support for the bulls, with roughly 688,690 addresses previously buying approximately 348,720 BTC in this zone.
Support Levels
The chart below displays the number of addresses that acquired Bitcoin within each price range.
BTC/USD Four-Hour Chart
| Date | Price |
| — | — |
| Nov 25 | $92,876 (Buyer Congestion Zone) |
| Dec 2 | $95,051 (Support Level) |
Conclusion
The stagnant market can be attributed to the decrease in flows into BTC investment products and the Thanksgiving holiday. Bitcoin’s price is currently stuck between its resistance level at $99,700 and support at $91,600. To break out of this consolidation pattern, Bitcoin needs to surpass the resistance at $98,200.
Further Research
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