Bitcoin Bulls Prepare for Rebound as Investors Withdraw Millions After CPI Report

Bitcoin Bulls Prepare for Rebound as Investors Withdraw Millions After CPI Report

Bitcoin’s price has found support around the $29,500 level following the release of the August 10 Consumer Price Index (CPI) report, which showed a slight 0.2% increase in inflation. While this matches market expectations, initial reactions from investors resulted in a slight drop in the price of Bitcoin towards $29,300.

However, on-chain data suggests that Bitcoin bulls are actively working behind the scenes to trigger a rebound in the price. Following the CPI report, investors moved a total of 5,949 BTC, equivalent to approximately $175 million, off exchanges. This brings the total amount withdrawn in August to a staggering 19,837 BTC, worth around $585 million.

Tracking real-time changes in the total Bitcoin balances deposited into exchanges globally, the Exchange Reserves chart from CryptoQuant indicates a consistent drop in reserves. This suggests that investors are more inclined to hold onto their Bitcoin for future gains rather than engaging in short-term selling opportunities.

Despite the slight price retracement triggered by the CPI report, Bitcoin bulls are making efforts to prevent a major correction in the price. The Exchange On-chain Market Depth chart reveals that bullish traders have placed more buy-orders compared to active sell orders from traders looking to exit their positions. As of now, there are 24,000 active Bitcoin buy-orders, significantly outnumbering the 22,700 active sell orders.

When active buy-orders surpass market supply, it typically signals a potential price rebound. Currently, Bitcoin sell-orders exceed market supply by 1,300 BTC. If the predicted bullish momentum takes hold, buyers may gradually increase their bid prices to quickly fill their orders.

Considering the drop in exchange reserves and the increasing market demand, there is a possibility of a Bitcoin price recovery. The In/Out of Money (IOMAP) data, which analyzes the distribution of BTC holders’ entry prices, points to the $30,200 territory as a critical sell-wall that could impede Bitcoin from reaching the $31,000 price target. This sell-wall is backed by 2.49 million addresses that acquired 1.08 million coins at an average price of $30,268.

However, if Bitcoin investors continue to withdraw coins from exchanges as observed previously, a supply squeeze is likely. This could propel Bitcoin towards the $31,000 target. On the other hand, a break below the $28,500 support level could invalidate the positive price prediction. Nevertheless, the 176,000 addresses that purchased 944,000 BTC at the average price of $28,488 could provide significant support. Nevertheless, if that support level fails, Bitcoin could decline towards $27,000.

In conclusion, the recent withdrawal of Bitcoin from exchanges and the increase in buy-orders indicate that Bitcoin bulls are preparing for a potential rebound in the price. While the CPI report initially caused a slight drop, the efforts of the bulls, combined with the supply squeeze from withdrawals, could contribute to a price recovery. However, it’s important to consider both bullish and bearish scenarios to maintain a balanced perspective on Bitcoin’s future performance.