Bitcoin (BTC), which is currently in a close battle between bears and bulls, is reacting now, according to data.
Trackers revealed that Bitcoin difficulty posted its first decrease since July this week with an 18-week long green streak.
The difficulty adjusts to 20% BTC price dip
There is concern that Bitcoin may not have retraced its recent $69,000 highs despite the fact that it has been experiencing cyclical price movements in the short-term.
Despite having nearly doubled year-to-date, analysts have been surprised by the BTC/USDs surprise performance.
“With Bitcoin now more than 20% below its all-time high, headlines in traditional media declare that Bitcoin has entered an bear market,” Glassnode, an on-chain analytics firm, stated in its weekly newsletter “The Week on-Chain.”
“However, it might surprise some readers that the current market correction in 2021 is actually the mildest. Many might even suggest that it is business as usual for Bitcoin HODLers.
Network fundamentals now take the latest dip into consideration. After rising for nine consecutive periods, difficulty dropped 1.5% on Sunday. The next adjustment is expected to result in a decrease of almost 2%.
Average chart for Bitcoin difficulty over 7 days. Source: Blockchain
Long-term holder spending sparks “uncertainty”
Glassnode didnt rule out future price drops when he looked at the landscape.
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Combining long-term holder selling with high open interest in derivatives markets, and other phenomena could lead to a continuation or a decrease in the downtrend to new lows.
“Open interest leverage in options, futures and at or near ATHs is cause for concern about heightened flushout potential. It concluded that funding rates indicate a slight positive bias which makes both short- and long-squeeze scenarios possible.
It added the following:
“Long-Term Holdings have distributed 5.8% from the supply accumulated between March and there is some uncertainty based on their spending habits.”
Chart showing long-term price paid by holder Source: Glassnode
Willy Woo, an analyst, said that open interest may be discussed in the meantime. He noted that activity might just stay higher post-ETF and not necessarily indicate turbulence.
He tweeted, “IMO it doesn’t necessarily have to be flushed.”
It could indicate that futures ETFs are in high demand.
BTC/USD was at $56,000 as of Thursday morning after having spent the last 24 hours repeating a run up to $59,000 and subsequent rejection.