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Bitcoin Price Rally in Danger as Miners Dump $8.2 Billion Worth of BTC

Bitcoin’s price experienced a significant drop to a weekly low of $50,664 on February 21, narrowly avoiding widespread liquidations in the market. The on-chain data analysis has shed light on the likely reasons behind the recent pullbacks in Bitcoin’s price.

Following an impressive 27% surge in February, Bitcoin reached a 3-year peak of $52,985 on February 20. However, the cryptocurrency is now facing challenges in sustaining its momentum. One contributing factor to this struggle is the increased profit-taking by miners leading up to the upcoming halving event. Additionally, a decline in ETF (Exchange-Traded Fund) inflows has posed a threat to the rally in Bitcoin’s price.

Bitcoin miners have been observed selling BTC worth $8.2 billion in the previous 30 days, further impacting the cryptocurrency’s price. The selling trend by miners, coupled with a slight decrease in ETF inflows, has added to the downward pressure on Bitcoin’s value. Despite a quick rebound to around $51,500 on February 22, the on-chain data suggests that the bull rally may not be fully back on track yet.

Cryptoquant’s miner reserves metric monitors the real-time balances held by BTC miners, revealing a substantial decrease in BTC reserves by 160,000 BTC (equivalent to approximately $8.2 billion) between January 31 and February 22. This intensified selling activity by miners following Bitcoin’s local peak of $52,858 on February 15 indicates a bearish sentiment among these key stakeholders.

The decline in demand from Bitcoin ETFs has further contributed to the price drop, as ETFs reduced their buying trend by 73% between February 19 and February 22. This contrasted with the significant accumulation in the first half of February that drove Bitcoin to new peaks.

In terms of price forecast, Bitcoin is expected to hold above $48,500, should it lose the psychological support level of $50,000 in the short term. The Bollinger Band technical indicator suggests potential support and resistance levels for Bitcoin’s price movement, with the 20-day Simple Moving Average (SMA) price acting as a crucial support level at $48,560 below the $50,000 threshold.

Traders are advised to consider setting stop-loss orders around $45,000 for risk management in case of a breakdown below the $48,560 support level. Conversely, targeting take-profit orders around $55,000 could capitalize on potential resistance near $55,830, strategically navigating potential consolidation or pullback scenarios.

Overall, the interplay between miners’ selling activities, ETF demand, and technical indicators presents a dynamic landscape for Bitcoin’s price movement in the near term. Strategic traders will need to closely monitor these factors to make informed decisions and navigate the volatility in the cryptocurrency market.

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