Bitcoin Stability Suggests Traders Buying Dips Below $18.5k - Morgan Stanley

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By Sam Boughedda 

Morgan Stanley analysts said in a note to clients on Friday that the current resilience in Bitcoin suggests some traders are buying dips below $18,000.

"Bitcoin has traded in the narrowest $ range since late 2020, despite volatility in other markets," said the analysts, adding that "stability suggests some traders are buying dips below $18.5k to prevent BTC falling materially below its 2017 prior cycle high."

The analysts feel that as it is almost 1 year into the bitcoin bear market, most who bought bitcoin in 2021 are "facing heavy losses and appear to be waiting for any rallies to close their position."

"A record number of bitcoin units haven't been used for any transaction in the past 6 months, currently at 78% of total and this number continues to rise. What this means, if we oversimplify a bit, is that those who bought/received bitcoin more than 6 months ago are holding onto their positions, with some likely waiting for a price recovery. For the remaining 22% of bitcoin units held by the shorter term investors who did transact bitcoin in the past 6 months, estimates suggest their average breakeven price is just over $22.3k," the analysts wrote.

Shah also revealed that trading volumes are falling on most exchanges except the largest, Binance, following the company lowering bitcoin trading fees to zero in July to increase market share.