Bitcoin has definitely been struggling with low volume amid the uncertain conditions. But the latest market data indicated that demand was gradually building up. According to Glassnode, on 9 September, Bitcoin addresses holding at least 1 BTC reached a new all-time high at 1.09 million.
The fact that whole coiners have been on the rise is a good indicator of the prevailing level of Bitcoin demand. Despite the growing accumulation, the low level of network activity has affected miner profitability and consequently, its hash rate.
Exchange balances underscore downside expectations
Although whole coiners have been accumulating, Bitcoin was still experiencing significant sell pressure, which may explain why Bitcoin is still struggling to exit its current support level. Bitcoin’s exchange balances have been growing since the end of August.
Source: Glassnode
Rising exchange balances are a sign that more traders have been moving their funds onto exchanges. A possible reason for this could be that many traders anticipate more downside, hence they have been holding more coins on their exchange addresses to sell in case the market crashes.
It could also indicate a surge in sell pressure.
The next Federal Reserve announcement about interest rates is just days away. There are concerns that the next interest rate hike could trigger another Bitcoin selloff.
However, if that were to happen, it would likely be followed by heavy accumulation as traders take advantage of the extended discount. This is also one of the main reasons behind market volatility, as BTC traders wait to see which direction the market will sway.
Based on the above, there is a chance that Bitcoin could lose its current support in case of a major selloff. However, the potential downside could also be limited. This is because its price action in August could have priced in the potential impact of interest rate hikes.
On the other hand, Bitcoin traders could also be on the lookout for a favorable outcome. This would not only strengthen the support level but also act as the next pivoting point for another bull run. The probability of that outcome rationalizes the accumulation currently taking place.
