Bitcoin (BTC) Investors Buy the Dip as Transaction Volume Breaks Four-Month Downtrend

Bitcoin (BTC) investors are back using the blockchain as Bitcoin's transaction volume surged, breaking a four-month downtrend.

People holding Bitcoin (BTC) are once again using the blockchain, with the transaction volume surging to break a four-month downtrend.

Meanwhile, the crypto exchange’s flow and social context indicators suggest that people are buying the recent price dip.

Previously, a transaction volume uptrend sent Bitcoin’s price from $26,500 to reach an all-time high of $73,800. BTC then consolidated within a four-month price range. As this developed, the transaction volume indicator entered a downtrend, which the cryptocurrency just broke from July 3 to 5.

Finbold retrieved this data from Santiment on July 6, as shown in the following chart. Notably, the network moved over 750,000 BTC on July 4, while exchange outflows peaked at a month’s high.

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All this happened as the BTC price broke down from the four-month range to reach a low of $53,500. The leading cryptocurrency currently trades at $56,700, still below the range’s support at $60,000.

Bitcoin investors ‘buy the dip’

In this context, an analysis of Santiment’s social indicator shows a surge in mentions of “buy the dip” and related variations on social platforms. The increase occurred at the same time as the price dropped to a local bottom.

Historically, these “buy the dip” chants surge when Bitcoin’s price falls sharply, and they tend to consolidate local bottoms. The current spike is at the same level as in May, when BTC briefly lost the four-month range, trading as low as $56,685 in a standard deviation from the $60,000 support. If history repeats itself, Bitcoin could be set to reclaim its previous levels, although nothing is guaranteed.

However, as investors ‘buy the dip’ and withdraw Bitcoin from exchanges, a significant sell-off could be looming for the primary cryptocurrency.

On that note, Mt. Gox has begun its repayments after over a decade of creditors’ waiting. The defunct exchange will repay over $8 billion in BTC and Bitcoin Cash (BCH), which could create a substantial selling pressure for both cryptocurrencies. Moreover, the German government has been selling millions of dollars’ worth of Bitcoin over the past few days.

Thus, investors should exercise extreme caution with leverage, as macroeconomic developments could push Bitcoin in either direction. Crypto traders lost over $600 million in the crash from leveraged position liquidations, and analysts anticipate further liquidations.

The content on this site should not be construed as investment advice. Investing is speculative. When investing, your capital is at risk.

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