Is Bitcoin (BTC) Price Due for Mild Correction as Crypto Investors Eye Altcoins?

Bitcoin (BTC) price has slipped below $30,000 after nearly a week. Among other macro factors, the downtrend in critical on-chain data points like BTC dominance and balances held by long-term investors. Could BTC be in for a mild correction?

After delivering a 70% price growth in Q1, Bitcoin consolidated on its recent rally to soar above $30,000 on April 10. With the global crypto market capitalization climbing toward $1.26 trillion, investors now appear to be looking beyond BTC as they grow confident about the broader cryptocurrency market.

BTC Dominance Takes a Hit

Bitcoin dominance (​​BTC.D) has declined by 2 percentage points in the past week. BTC.D tracks the percentage of the total cryptocurrency market valuation, including bitcoin’s market capitalization.

The chart below illustrates how BTC.D has decreased sharply from 49% on April 12 to 47% as of April 17.

Bitcoin (BTC) Crypto Market Dominance, April 2023, Source: Trading View

A decline in BTC dominance can indicate a shift in market sentiment towards altcoins. When investors become more interested in altcoins, BTC often loses market share as they may sell some of their Bitcoin holdings to purchase other cryptos. Ultimately, this could lead to a short-term decrease in bitcoin price.

Likewise, the decline in the balances held by long-term BTC holders further confirms the bearish premise. According to IntoTheBlock, crypto investors who have held their assets for more than 1 year have begun divesting from BTC in recent weeks.

Between April 9 and April 17, the long-term HODLers (addresses that held onto Bitcoin for over a year) have offloaded 300,000 BTC worth nearly $9 billion. Meanwhile, balances held by short-term investors and speculative traders have increased by 17% in the last 30 days.

Bitcoin (BTC) Price vs. Coins Time Held. April 2023, Source: IntoTheBlock

When long-term holders divest, and short-term traders gain more influence on the market, the asset could experience slow growth and high volatility.

Hence, long-term crypto investors could be looking toward altcoins for diversification and higher yield. Therefor BTC could experience a mild correction in the coming weeks.

BTC Price Prediction: Strong Support at $28,300

According to IntoTheBlock’s In/Out of Money (IOMAP) chart, Bitcoin will unlikely drop below $28,000 if the bears hold sway momentarily. The IOMAP data helps to identify support and resistance zones by tracking the volume of coins transacted at different price levels.

As shown below, the bears are likely to force a downswing, but the 405,000 addresses that bought BTC at an average of $29,300 will pose some challenges.

But if that does not hold, $28,300 is a larger support level. Here, a bullish army of 824,000 addresses holding 519,000 BTC will look to stand their ground.

Bitcoin (BTC) In/Out of Money Around Price data. April 2023, Source: IntoTheBlock

Bulls could get more wind in their sail if Bitcoin price breaks above the recent local high around $30,750. But the 1.3 million addresses holding 633,000 BTC could slow the upswing as they look to book profits.

However, if Bitcoin breaches that resistance, it could head toward the next significant resistance at $33,000.

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