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Due to a lack of positive catalysts, BTC may record its first monthly negative return since November last year.

Author: Mary Liu, Bitpush News

BTC briefly regained $28,000 lost ground for the first time since the beginning of the month after the Biden administration reached a preliminary protocol with Republican lawmakers on the United States debt ceiling. However, as of press time, BTC has fallen back below $28,000, and ETH is trading around $1,910.75.

From the perspective of Liquidity and macro, due to the lack of positive catalysts, BTC may record its first monthly negative return since November last year.

Whale Supply Metric Stagnates

According to on-chain analysis firm Santiment, the ‘Supply Distribution’ indicator shows that BTC Whales have become more cautious in the past few weeks. Supply distribution measures the total amount of BTC currently held by each wallet group in the market.

Santiment defines WhaleWallet’s holding as 10-10,000 BTC. The following chart shows the supply distribution trend of this address group in the past few months:

From the chart above, it can be seen that the total holdings of these Addresses started to decline after a surge in March. When these investors are dumping, the price mostly sideways consolidates, which means that the dumping by these groups may slow down the upward trend. Then, in mid-April, as BTC touched the local top near $31,000, the supply of Whales instead reached a local bottom. As the price began to decline, these investors subsequently started accumulating. This pattern suggests that these holders are taking advantage of the lows to buy again.

The data shows that since the partial high point in April, these Addresses’ Wallets have collectively increased by about 93,000 BTC (equivalent to 2.6 billion US dollars at the current price).

However, in recent weeks, the supply of these Addresses has begun to stagnate, and this new Sideways trend may indicate that major investors are now more cautious about buying more, as they are unsure which direction BTC will take next.

Liquidity lingers at a low level

Due to the pressure on encryption investors caused by last week’s debt ceiling negotiations, the latest Federal Reserve meeting minutes also showed that Central Bank officials had divergent views on the direction of interest rate hikes. The correlation between BTC and gold has fallen from this year’s historical high and is beginning to behave more like a risk asset.

Japan BTCexchange Bitbank encryption market analyst Yuya Hasegawa said BTC is currently testing its March resistance level of around $28,800.

The encryption market has been lacking in Liquidity stimulation recently. Matteo Greco, an analyst at investment company Fineqia International, stated in his report: “In the medium term, funds will be withdrawn from higher-risk assets and used to purchase government bonds. The result may be a further slowdown in volume and Liquidity in the stock and digital asset markets, with potential negative impacts on prices.”

Glassnode’s Chief On-chain Analyst James Check said that after a long period of unusually low fluctuation, the next major price movement for BTC may be imminent, potentially pushing BTC up to $32,000. Check explained in an interview with Cointelegraph that this price level is where BTC’s “real cost basis” lies.

In order to calculate the average cost basis of BTC (the average price of purchasing BTC), Check and his team excluded forever lost or dormant Tokens from the calculation, focusing on active BTC investors. He said, ‘This is where the mean reversion level is, so honestly, a rebound to that level wouldn’t surprise me.’

Despite the bullish situation, Check also pointed out that many investors may have grown tired of the Bear Market, waiting to sell until BTC reaches that level, thereby putting pressure on the price: ‘This is where you start to encounter more resistance’.

The correlation of the US dollar index

The PA of BTC is closely related to the macroeconomic situation. In recent weeks, due to the strengthening of the US Dollar Index (DXY), the Rebound of Interest Rate, and other unfavorable factors such as the possibility of further interest rate hikes by the Federal Reserve, BTC has been suppressed below $30,000.

Glassnode co-founder Yann Allemann analyzed the possibility of BTC rebound under the changes in DXY and Intrerest Rate in his tweet.

Allemann believes that the US dollar index - DXY - which measures the US dollar against a basket of six major currencies, has always been a key factor affecting the price of BTC. The strength of the DXY is inversely proportional to BTC, which means that when the US dollar index strengthens, BTC generally weakens, and vice versa. The expected turning point of DXY at the level of 106-107 may indicate a bullish BTC.

In addition, the changing macroeconomic conditions may enhance the momentum of BTC. Congress will vote on the legislation as early as Wednesday, and it remains to be seen whether the debt ceiling protocol can be passed on Wednesday.

According to the Bitpush Terminal data, as of now, the transaction price of Bitcoin is $27,782. Without major Favourable Information stimulus, Bitcoin and Ethereum may face their worst month since November last year.