Bitcoin distribution ‘danger zone’ over, analysts say

Bitcoin’s (BTC) price rose above the $65,000 mark on May 6 as analysts argued that the post-halving “danger zone” may be over, with more BTC upside on the way.

Bitcoin out of the post-halving “danger zone” — analyst

Bitcoin’s post-halving danger zone is a three-week window after the halving, historically associated with downside volatility occurring below the reaccumulation range.

With Bitcoin rising above the current reaccumulation range of approximately $60,000, the post-halving danger zone may be over, according to popular crypto analyst Rekt Capital. He wrote in a May 6 post:

“Time-wise the post-Halving ‘Danger Zone’ will continue for the remainder of this week, to see out its third final week in this post-Halving window. However, price-wise the anticipated effect has already occurred.”

BTC/USD chart. Source: Rekt Capital

During the 2016 bull cycle, Bitcoin produced an 11% downside wick 21 days after the halving, which marked the beginning of the price reversal, noted Rekt Capital in a May 6 X post:

“History did repeat because in this cycle Bitcoin produced a -6% downside wick below its respective Range Low in the 15 days after the Halving. Bitcoin has since rebounded strongly to the upside… The Bitcoin Post-Halving ‘Danger Zone’ is over.”

Meanwhile, Bitcoin analyst Willy Woo also expects higher BTC prices based on the volume-weighted average price (VWAP), a popular oscillator used by traders to determine the average asset price based on price action and volume.

Woo wrote in a May 6 X post:

“Seems like a good setup for BTC to reach escape velocity. Bull divergence with lots of room to run.”

Bitcoin VWAP Oscillator. Source: Willy Woo

Further showcasing a change in investor sentiment, the Crypto Fear & Greed Index rose to 71/100, signaling “greed” — up from 43/100, or “fear,” on May 2.

Source: Crypto Fear & Greed Index

Are Bitcoin’s long-term holders done selling?

Outflows from the 11 United States spot Bitcoin exchange-traded funds (ETFs) have contributed to Bitcoin’s correction. The U.S. ETFs recorded their highest week of outflows since launching, with nearly $900 million in net cumulative outflows over the past week, according to Dune data.

Bitcoin ETF net flows, weekly. Source: Dune

Related: Bitcoin enters ‘new era’ as whales scoop up over 47K BTC during price pullback

Interestingly, data suggests that long-term holders (LTH) at the $70,000 price have finished selling to new investors. Thus, a new active accumulation phase could be starting, according to CryptoQuant author Axel Adler Jr.’s May 6 X post.

BTC long-term holders accumulation. Source: Axel Adler Jr.

This can significantly reduce Bitcoin’s sell pressure, paving the way toward a gradual climb to new highs, according to Eitan Katz, the founder of Kima, a decentralized money transfer protocol. Katz told Cointelegraph:

“The completion of distribution by long-term holders at the $70,000 mark could indeed alleviate some sell pressure in the market. This scenario might contribute to a more stable environment and provide new investors with a clearer path for growth.”

However, Bitcoin could remain subdued in the short term, due to concerns over inflation and dampened expectations for rate cuts, according to Mithil Thakore, CEO of Velar, a Bitcoin-native liquidity protocol. Thakore told Cointelegraph:

“Last week’s decision by the Federal Reserve to maintain interest rates at two-decade highs, while signaling potential future reductions, adds complexity to the market landscape. Considering these factors, short-term consolidation below the previous all-time high is conceivable.”

After the current short-term consolidation, Thakore expects Bitcoin price to reach $100,000 before the end of 2024. He said: 

“The latter part of 2024 holds promise for Bitcoin. Anticipated interest rate reductions, renewed demand in ETFs and advancements in Bitcoin layer-2 solutions may fuel a resurgence, potentially propelling Bitcoin to new all-time highs and the coveted $100,000 milestone.”

Related: ‘Mr. 100’ buys the Bitcoin dip for the first time since halving — Is the BTC bottom in?

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.


Please enter CoinGecko Free Api Key to get this plugin works.