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Bitcoin Trading in ‘Air Pocket’ Below $80K While Stablecoin Activity Surges
The price of bitcoin has dipped below $75,000 twice in the past week after reaching an all-time high of $109,000 in January, amid heightened volatility. Data shows that less than 2% of Bitcoin’s total supply exists within the $70,000-$80,000 range, creating a “thin liquidity air pocket” for investors to navigate.
According to unspent transaction output (UTXO) data, this price range lacks sufficient trading history, making predictions challenging and potentially leading to rapid price movements in either direction. This lack of consolidation has led some analysts to warn that the current price action could result in significant losses if not managed properly.
Meanwhile, stablecoin activity has reached record levels, with over $220 billion in circulation and transaction volume exceeding $72 billion. The number of active addresses for stablecoins, particularly USDT and USDC, has exceeded 300,000, indicating a surge in usage.
Market analysts have offered contrasting views on the significance of this development. On one hand, it could signal that investors are preparing to buy cryptocurrencies at lower prices by using stablecoins as “dry powder” waiting on the sidelines. Alternatively, it may indicate that investors are moving their assets from volatile cryptocurrencies into stablecoins to avoid further market drops.
The mixed sentiment in the market has led to a lack of clarity regarding Bitcoin’s next major move. As more than a quarter of all Bitcoin holders are currently underwater on their investments, the behavior of these short-term holders is likely to play a crucial role in determining the cryptocurrency’s future price action.
As the market waits for signs that consolidation will lead to further drops or a renewal of the uptrend, traders are closely monitoring whether Bitcoin can establish support within this air pocket or if volatility pushes prices out of this range quickly.
Source: https://blockonomi.com/bitcoin-trading-in-air-pocket-below-80k-while-stablecoin-activity-surges/
