Bitcoin Signal Hints Uptrend Amid 96% Buyer Drop

Is Bitcoin Ready to Rally Again?

If you have been watching the crypto markets recently, you might have noticed Bitcoin (BTCBTC-0.50%) bouncing around $82,300. Even with the recent short-term price drops, Bitcoin is still up roughly 28% over the past three months. However, the crypto market is known for its sudden swings, so caution is always essential.

Behind the daily market noise, analysts have spotted a curious pattern on the charts. On one hand, a technical indicator suggests that Bitcoin's overall uptrend is far from dead. On the other hand, on-chain data reveals a staggering 96% drop in buying activity from long-term investors. So, what exactly is happening under the hood?

The Hidden Chart Signal Keeping the Bullish Case Alive

Let us start with the good news on the price charts. Between September 2 and October 8, Bitcoin accomplished something important: it formed a higher low. This means that when the price dipped, it stopped falling at a higher point than it did in the previous dip, which is usually a sign of underlying strength.

At the same time, a popular momentum indicator called the Relative Strength Index (RSI) was doing something completely different.

To put it simply, the RSI measures how fast people are buying or selling on a scale from 0 to 100. During that same timeframe, Bitcoin's RSI fell from around 65 down to 47, creating a lower low.

When price makes a higher low while momentum makes a lower low, chart analysts call this a hidden bullish divergence. Here is why that matters:

• Cooling down without breaking: It suggests that the recent price drop cooled off overbought momentum without destroying the overall upward trend.
• Seller exhaustion: Red selling volume bars on the daily chart have grown since October 6, but the volume on October 8 was actually about 18% smaller than the peak seen on October 2. Sellers are pushing, but with noticeably less energy.

The 96% Problem: Long-Term Holders Take a Breather

If selling pressure is waning, why did momentum drop so much faster than the price? To answer that, we have to look at who is doing the buying.

On-chain analytics firm Glassnode tracks a metric called Hodler Net Position Change. This metric measures the monthly change in coins held by long-term Bitcoin investors—often referred to as 'HODLers' or conviction buyers who rarely sell on a whim.

The data reveals a dramatic slowdown in accumulation:

• September 20 Peak: Long-term holder net position reached a high of 25,734 BTC.
• October 8 Slowdown: By October 8, that figure crashed by 96% down to just 1,051 BTC.
• Weakest in months: This represents the weakest positive accumulation reading seen in three months.

In short, long-term investors are still buying, but only barely. With long-term accumulation thinning out and seller volume fading from its October peak, Bitcoin managed to hold a higher low while chart momentum drained away.

Lessons from August: Can Bitcoin Rise Without Long-Term Buyers?

This is not the first time long-term investors have stepped back during a rally. A similar pattern played out in late July and August.

Back then, the Hodler Net Position Change metric actually turned negative from August 2 to August 30, meaning long-term holders were actively selling into the price rise. Yet despite that distribution, Bitcoin still managed to gain 24% over the course of the month.

How did Bitcoin climb higher while long-term investors were selling? Institutional buyers filled the gap.

Spot Bitcoin ETFs enjoyed a massive nine-day buying streak from August 17 to August 27, absorbing over $3.04 billion worth of coins and soaking up supply from the market.

Past performance of digital assets or past results do not guarantee future returns or performance.

Fast forward to today, however, and ETF demand looks much cooler. Data from SoSoValue shows that institutional ETF funds pulled out $731 million across October 7 and October 8 alone during the recent crypto sell-off.

For Bitcoin to repeat its August performance, market watchers note that either institutional ETF inflows need to return or long-term holders must start buying heavily again.

Critical Bitcoin Price Levels to Watch Next

To understand where Bitcoin might head next, analysts are looking closely at key support and resistance boundaries on the price chart. Here is how the scenarios break down:

Upside Resistance Levels

• $83,325: The first key milestone is securing a daily candle close above $83,325 to confirm short-term stability.
• $88,086: Above that sits the major resistance zone near $88,086, which aligns with the 0.618 Fibonacci retracement level—about 7% above current price levels (near the $86,616 September high zone).
• Bullish Scenario: If institutional ETF buying resumes and drives a daily close above $88,086, it could restore market confidence and encourage long-term holders to resume accumulation.

Downside Support Levels

• $80,383: This represents the October 8 floor low that established the higher low behind the hidden bullish divergence.
• $75,041: The September 15 bounce point.
• Bearish Scenario: If market selling pressure accelerates and causes Bitcoin to fall below $80,383, the hidden bullish divergence pattern would be invalidated, opening the door for a retest of $75,041.

Summary: A Market in Search of Momentum

Bitcoin finds itself in a delicate balance. The technical charts hint that the broader uptrend remains active through a hidden bullish divergence pattern. However, with both institutional ETF flows and long-term investor accumulation temporarily quiet, the market lacks the immediate buying power for a swift breakout.

Whether Bitcoin can resume its climb or test lower support levels will largely depend on whether big buyers return to the market in the coming days.