Bitcoin is once again facing selling pressure, with $5.64 billion in realized profits recorded in the last 24 hours. This surge in profit-taking has led to a sharp decline in Bitcoin’s price, dropping by 2.33% in a single day. After opening above $62,000 on Wednesday, the cryptocurrency fell to $60,300, extending its bearish trend amid negative institutional sentiment and dwindling trading volumes.
Billions in Realized Profits – A Bearish Signal?
On-chain data expert Ali Martinez revealed that $5.64 billion in realized profits were recorded recently, signaling that many investors have taken advantage of Bitcoin’s recent price highs to cash out. This pattern of mass profit-taking often creates downward pressure on the market, as seen in this instance. Historical data suggests that such spikes in realized profits frequently coincide with market corrections or price consolidations.
Lower trading volume has added to the bearish outlook. Bitcoin’s trading volume dropped by 17% in the past day, indicating reduced market activity, which typically points to a weakened market sentiment. When combined with large-scale profit-taking, this sets the stage for potential continued selling pressure.
Institutional Investors Fuel the Bearish Trend
Adding to Bitcoin’s challenges is a negative reading on the Coinbase Premium Index, which measures the price difference between Bitcoin on U.S.-focused Coinbase and Binance, favored by global retail traders. A negative premium signals stronger selling activity from U.S. institutional investors. The latest data from CryptoQuant shows the Coinbase Premium Index dropping to -41, suggesting a significant sell-off by U.S.-based institutions.
This bearish sentiment among institutional investors has been a consistent theme in recent weeks. Throughout October, the Coinbase Premium Index has remained negative, signaling a persistent preference for selling Bitcoin on Coinbase rather than holding or buying. This trend is concerning, as institutional investors play a crucial role in stabilizing Bitcoin’s price.
One notable factor contributing to institutional selling is the approval of the U.S. government to sell $4.38 billion worth of Bitcoin seized from the infamous Silk Road case. This influx of Bitcoin into the market is expected to weigh heavily on the price, contributing to the overall bearish trend.
Despite the short-term bearishness, some analysts remain optimistic about Bitcoin’s long-term potential. Veteran chartist Peter Brandt points to the BTC/GLD ratio, which measures Bitcoin’s value relative to gold, showing that Bitcoin continues to outperform traditional assets. Brandt believes that if Bitcoin can break through key resistance in the BTC/GLD ratio, it could signal a significant rally for the cryptocurrency.
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According to Brandt’s projections, Bitcoin could rise to over 100 ounces of gold per Bitcoin if it breaches its current resistance level of 32 ounces of gold. This projection suggests that while short-term sentiment remains bearish, Bitcoin still holds long-term value, especially in comparison to other traditional assets like gold.
A Critical Moment for Bitcoin
Bitcoin faces a pivotal moment as it contends with selling pressure fueled by billions in realized profits and bearish institutional sentiment. While the short-term outlook appears bleak, with declining trading volumes and significant institutional sell-offs, long-term potential remains, especially in light of its historical outperformance against gold. The coming weeks will be critical in determining whether Bitcoin can withstand the current selling pressure and rally back to higher levels.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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