Bitcoin hodling rate reaches 9-month high, boosting hopes of ‘bull flag’ rally to $70K

Glassnode data shows that traders have chosen to trade the token for other assets instead of trading Bitcoin (BTC). This is despite a year-long price rise in Bitcoin (BTC).

On Oct. 28, the blockchain data analytics service reported that the total number of “hodled” or lost coins had reached a nine month high of more than 7.21 million BTC. The Bitcoin metric simply indicated an increase in out of circulation tokens. These could have been lost by humans or long-term holders and were not likely to recover.

BTC amount of HODLed coins or lost coins. Source: Glassnode

The cryptocurrency became more scarce because of the high number of stolen/hodled Bitcoins. This resulted in 34% of the 21 million tokens that were available.

Further evidence for a Bitcoin supply shock

CryptoQuant also provided additional data that showed that the total Bitcoin reserves across all crypto exchanges fell to their lowest level since August 2018, at 2.337 Million BTC on October 28, 2021.

The Miners Position Index (MPI), which measures BTC leaving miners’ wallets relative to their 1-year moving average, is trading below zero since March 6, 2021. This suggests strong accumulation among miners.

Bitcoin all exchange reserves and miners position index. Source: CryptoQuant

“The Bitcoins [owned] by miners are on similar levels to… in May, when the price was below $40k,” said a CryptoQuant analyst. This is after BTC tried to rebound from its October 26 fall below $60,000, adding:

“You can easily see how far we are from the last bulls run.”

What do the technicals of BTC prices say?

After October’s 60% rally, Bitcoin’s price corrected from $67,000 to $58,100. BTC/USD however formed a parallel descending range (purple) raising suspicions that the structure could be a Bull Flag.

BTC/USD daily chart with Bull Flag setup Source: TradingView

Bulls Flags, which are bullish continuation patterns, send the price in the opposite direction to their previous trend after a consolidation period. The technical indicator then looks at the upside targets of the Flagpole. This is done when the price breaks above Flag’s upper trendline.

Related: Does Bitcoin’s price mirror the 2017 bull market? Eric Balchunas, ETF expert, shares his insights on The Market Report

The Bitcoin flagpole measures approximately $15,000 in length. This means that the cryptocurrency could theoretically rise as high as $15,000 since the time of the breakout. The Fibonacci levels shown in the chart may be used as floors to support a rebound towards $70,000 or higher.

However, traders may not be convinced that the current setup is short-term bullish.

“Some might say that this is a bull signal, and that’s certainly possible. However, the volume characteristics point towards a move lower than here, most likely, IMO,” said Alex, pseudonymous cryptocurrency trader.

Pentoshi, a fellow trader, said that the bulls would suffer if they fell below $58,000. He stated:

“BTC off $58k to the Dollar” What if this is a large bull flag and we are in a bull bull market that sees bull flags fall apart? The theory is that price should not go back to these lows. Bitcoin is currently in trouble 64k to 29k 29k up with only 2 misses in the macro. You should do your research before making any investment or trading decision.