Bitcoin Distribution: What Does It Mean for the Cryptocurrency Market?

Bitcoin Distribution – What Does It Mean for the Market?

Bitcoin, the largest cryptocurrency in the world, has recently raised concerns regarding its distribution. Holders of the cryptocurrency have started distributing their coins, raising worries among investors about the long-term consequences of this situation.

Bitcoin Overheating – What Do On-Chain Data Show?

On-chain data suggests bitcoin is overheating. According to an analysis of the Coin Days Destroyed (CDD) indicator by CryptoQuant, it has reached a five-year high for Bitcoin. CDD measures the number of days that individual units of Bitcoin have remained inactive, multiplied by the amount of transactions. Historically, the peak level of CDD on a 60-day moving average indicates that long-term investors are distributing their coins, which could lead to a significant price correction.

Decline in Activity – A Signal for Investors

There is also a decline in activity on the Bitcoin network, with the number of active addresses dropping to 706,000 within 24 hours (previously above 1 million). This may suggest fewer successful BTC transactions. The Network Value to Transactions (NVT) ratio for Bitcoin currently stands at 405, indicating bullish sentiment but also an overvaluation of the cryptocurrency itself.

Price Forecasts and Market Perspectives

An analysis by Ali Martineza suggests that the price of Bitcoin could drop to $63,150 if the bulls fail to maintain support at $68,300, or rise to $70,320. It appears that the price of Bitcoin may drop before the upcoming halving scheduled for April 19. There is also a perspective that Bitcoin could reach $70,000 in the current cycle, but current conditions suggest this may occur only after this cyclical event.

The current situation in the cryptocurrency market, especially concerning Bitcoin, calls for caution among investors. Undoubtedly, the coming weeks will be extremely interesting for the entire cryptocurrency community.