Bitcoin’s (BTC) recent price surge has triggered a wave of profit-taking among long-term holders (LTHs), raising concerns about the sustainability of the ongoing bull run.
According to a recent report by blockchain analytics firm Glassnode, LTHs have realized a staggering $2.02 billion in daily profits, surpassing previous records and highlighting a significant shift in market sentiment.
Long-Term Holders Unloading Crypto
Over the past few months, LTHs have offloaded a substantial amount of Bitcoin, totaling 507,000 coins. While this figure is lower than the 934,000 BTC sold during the earlier rally this year, it still represents a notable increase in selling pressure.
Glassnode’s analysis reveals that coins held for six months to one year have been the primary driver of this sell-off, accounting for over 35% of total realized profits. These coins were primarily acquired in 2023, likely by investors who capitalized on the momentum generated by the launch of spot Bitcoin ETFs in January.
A Potential Correction Ahead?
Bitcoin’s recent rally pushed the cryptocurrency to within touching distance of the $100,000 mark. However, a sharp decline followed, with short-term holders (STHs) taking advantage of the opportunity to book profits.
Glassnode has identified a potential risk zone below $88,000, where minimal trading activity occurred during the previous rally. This “air gap” in supply distribution could make the price vulnerable to a correction if demand weakens or selling pressure intensifies.
Balancing Act – Demand vs. Supply
While Bitcoin’s price discovery process often involves cycles of upswings, corrections, and consolidations, the current market dynamics are complex. The influx of new supply from LTHs could potentially weigh on prices in the short term, especially if demand fails to keep pace.
To sustain the ongoing bull run, the market needs to absorb the ongoing sell-side pressure. However, the significant increase in realized profits by LTHs suggests a potential supply overhang, which could hinder Bitcoin’s ability to break through the $100,000 resistance level.
Bitcoin’s recent price surge has been accompanied by a significant uptick in profit-taking by long-term holders. While this behavior is not uncommon during bull markets, it raises concerns about the sustainability of the current rally. The potential for a correction below $88,000 highlights the importance of monitoring market dynamics and assessing the balance between supply and demand.
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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