Bitcoin (BTC) price recovers above $43,000 on Tuesday after its recent correction, which led to a fall from a two-year high of $48,969 to a low of $38,555.
Analysts at crypto intelligence tracker Santiment said that Bitcoin’s bull cycle, which started in October, is likely to continue as Bitcoin supply on exchanges has been in a downward trend since August. Dwindling exchange reserves are considered typical of a decline in selling pressure, which supports the thesis of a price recovery.
Also read: Chainlink price faces risk of correction as supply on exchanges climbs
Bitcoin supply on exchanges. Source: Santiment
Tether supply on exchanges climbs, BTC supply drops. Source: Santiment
Bitcoin price is currently in an uptrend that started in September. BTC climbed to its two-year high of $48,969 on January 11, before correcting to a low of $38,555. BTC price made a comeback above the $43,000 level on Tuesday, trading at $43,374 at the time of writing.
Looking up, BTC faces resistance at the bearish imbalance zone that expands between $43,870 and $45,562.
BTC/USDT 1-day chart
In the event of a decline, Bitcoin price could plummet to support at the psychological level of $40,000. If this threshold is broken,the next support zone is between $38,535 and $38,574.
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.