- January has been a bearish month the year after the halving
- The $180k expectations later this cycle are in the realm of being realistically possible
Bitcoin [BTC] has struggled over the past two months, but this is not out of the ordinary. The psychological $100k-level was not an easy nut to crack. And, even when it looked like the bulls finally flipped it to support, the sellers found a way to send the price tumbling.
Source: X
According to a post on X (formerly Twitter), BTC’s drawdown in January the year following the halving has usually been the norm. If the previous pattern holds, March could see Bitcoin trading near $130k.
Apart from historical price action data, the flow of BTC into and out of centralized exchanges also offers valuable insight into the behavior of market participants. Short-term holders exhibited a distribution phase recently, but their selling pressure is set to wane. This could aid the chances of a BTC’s recovery on the charts.
Price action, exchange netflow trends show bullishness ahead for Bitcoin
Source: CryptoQuant
The 30-day moving average of Bitcoin inflows to exchanges has been dramatically sliding since hitting a local high in early December. This drop was taking the 30 DMA to the lows seen in October and June 2024.
In June, BTC was trading near the $60k local lows amid its descending channel formation. In October, it broke this channel, but was still restrained by the $70k resistance. The drop in inflows while BTC consolidated below $100k was, therefore, a strongly bullish sight.
Source: CryptoQuant
The netflows, which was the difference between inflows and outflows, has also been trending south. The 30 DMA here too has been mostly negative since March 2024, with a brief period of positive flows in the second week of May.
Comparing the flows of recent months to the past cycles, such a sustained period of negative netflows (or outflows) was not seen previously. In 2020, the netflows were negative from late August to the final week of November. However, the past eleven months’ flow eclipsed the previous run’s three-month outflows by a significant margin.
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Hence, it appears reasonable to conclude that there is far more bullish conviction in Bitcoin this time.
While it might not lead to equally dramatic price gains, it would seem highly likely that long-term holders would panic less intensely and in smaller numbers when dramatic pullbacks do occur. This could limit the volatility and deep drawdowns that traditionally accompany a BTC bull run.
