Ever since Bitcoin (BTC) surpassed the $28,000 mark for the first time since August, traders have been harboring optimism about the potential return to $30,000. Nevertheless, this Bitcoin rally proved to be short-lived, as the cryptocurrency’s price retreated to $27,667 at the time of writing.
In spite of this correction, market participants continue to hold a positive outlook on Bitcoin’s upward trajectory, as emphasized in the monthly report from the on-chain analytics platform Santiment. Utilizing the social volume metric, which measures the level of discussion surrounding an asset, Santiment observed an overwhelmingly bullish sentiment in the market towards Bitcoin.
Notably, this bullish sentiment extended to other cryptocurrencies, including Chainlink (LINK), Aave (AAVE), and Ethereum (ETH). However, there was a specific aspect of Bitcoin that fueled the belief that $30,000 could be the next milestone.
According to Santiment, the supply of Bitcoin on exchanges reached its lowest point since December 2017. This decrease signifies that large holders, often referred to as whales, are moving their assets into self-custody, a move that suggests a lack of immediate selling pressure and hints at the potential for Bitcoin to resume its upward trajectory.
Supporting this argument, the on-chain data provider explained, “And when we compare these trends with the Bitcoin supply on exchanges, we observe that a significant portion of the largest token transactions contribute to the movement of coins into self-custody. This is generally regarded as a very positive sign, and it’s no surprise that October began with a six-week price high.”
Examining the 4-hour BTC/USD chart, the drop below $28,000 can be attributed to profit-taking within the market. As pointed out by Santiment, the rapid price increase led to one of the highest levels of on-chain profit-taking in the past three months.
Hence, Bitcoin’s initial surge to $28,432 might be considered a short-term local peak. The technical analysis also indicated the efforts of buyers to push the price upward, but these efforts were met with rejection around $27,680.
Nonetheless, there’s a possibility that this retracement will only be short-lived, primarily due to the condition of the Exponential Moving Averages (EMAs). At the time of writing, the 20 EMA (blue) had crossed above the 50 EMA (yellow), forming a golden cross, which typically signals a bullish sentiment among traders.
If the EMAs continue to maintain this stance, it may only be a matter of time before Bitcoin reclaims the $28,000 level. Furthermore, if accumulation and trading volume increase, Bitcoin could potentially surge toward the $30,000 mark.
Despite the recent pullback, the bullish sentiment for Bitcoin remains resilient. Maintaining its value above the psychological support level of $27,000 could pave the way for further gains. Altcoins may also benefit from this upswing, but traders should exercise caution in their approach.