Bitcoin is coasting on its road to recovery from Tuesday’s rocky sell-off that saw prices dip more than 18%.
The crypto is currently changing hands at around $46,840 after reaching a 24-hour top of $47,396, CoinDesk data shows. Bitcoin is up over 9% from the weekly low of $42,900 and over 61% in year-to-date terms.
“This week we saw one of crypto’s classic leverage shakeouts,” said Asher Tan, CEO of Australian cryptocurrency exchange CoinJar. “A quick 20%-30% haircut across the board as over-leveraged longs were flushed out of their positions.”
Prices have since bounced from bitcoin’s 200-day moving average (yellow line below) which has roughly acted as support around the $46,000 mark for almost three weeks, beginning Aug. 20.
“The market has stabilized after the large sell-off on Tuesday, said Jon de Wet, CIO at digital asset firm Zerocap. “Relative strength and other short-term oscillators are moving into oversold territory, and the bullish market structure is intact for the short term.”
While the drop took most people by surprise, the damage appears to have been limited to the derivative markets as long-term BTC holdings only increased during the downturn, Tan added.
Data by provider Glassnode shows wallet addresses holding 10 BTC rose by 154 from Tuesday’s dip to Friday. Smaller retail investors also increased their bitcoin holdings with wallet addresses containing exactly 1 BTC rising by 566 over the same period, including those holding 0.1 BTC or less. Wallet addresses containing 100 BTC or more fell sharply over the same time frame but could also be attributed to “short-term investors given the large wallet movements during the sell-off,” said de Wet.
Spent output ratios that look at profitability and losses taken over a particular time frame show long-term holders have largely maintained their positions indicating the larger wallet moves were on-balance active short-term traders.
Meanwhile, bullish daily spot exchange volume on Bitstamp rose to its highest point since Aug. 20, hinting at greater buying fervor around lower support levels and a temporary stay in short-term selling.
“We are seeing strong bids at these levels from the big players, which should buoy price coming into the weekend,” said de Wet.
Other notable cryptos in the top 20 by market capitalization were also trending in the green with DOT, LINK and AVAX clocking the highest gains over a 24-hour period.
“While bitcoin’s price is chopping around right now, the continued outperformance of certain altcoins – SOL and ALGO chief among of them – makes us cautiously hopeful that this is simply a speed bump on the path to higher prices,” Tan said.
See also: Where Is Bitcoin Headed?
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