Employees engage with passersby near a Bitcoin exchange advertisement truck in Hong Kong. — On Thursday, Bitcoin was trading around $96,500, having recovered from just under $90,300 earlier in the week. — AFP
After reaching nearly $100,000 last week, Bitcoin has experienced a slight downturn over the past week, hovering in the mid-$90,000 range. On Thursday, Bitcoin was fluctuating around $96,500, rebounding from just below $90,300 earlier in the week following its worst performance since Trump’s electoral victory, according to Reuters. The world’s largest cryptocurrency has surged by 37%, briefly approaching the $100,000 mark, driven by expectations of a more crypto-friendly regulatory environment under US President-elect Donald Trump. The last significant surge like this was in February, when funds flowed into new Bitcoin exchange-traded products.
So, what went wrong? Analysts suggest that while some investors fear speculative excesses, others point to an often-overlooked factor—the behavior of long-term Bitcoin holders (LTHs). These investors, typically seen as the market’s steadfast bulls, have recently shown an unexpected shift towards profit-taking. “These seasoned investors, who usually hold their coins for over 155 days, have started to engage in significant profit-taking, which could signal an impending market correction,” said Mohamed Hashad, Chief Market Strategist at Noor Capital, in a note.
Historically, LTHs have been known for their unwavering commitment to holding Bitcoin, even during periods of extreme volatility. However, the recent price surge has apparently tempted even the most patient investors to cash in on their gains, according to Hashad. “On-chain data shows a noticeable increase in the 30-day spent supply of Bitcoin by LTHs, indicating a substantial volume of coins being transferred and potentially sold,” he added. This increased selling pressure from LTHs, combined with the cumulative value of LTH distribution since November 2022, raises concerns about the sustainability of the current bullish momentum. “While Bitcoin has seen significant price appreciation in recent months, the market may be nearing a point of saturation, where further upside potential is limited,” Hashad noted.
The behavior of LTHs often acts as a leading indicator of market trends. “When LTHs begin to sell, it typically indicates a loss of confidence in the market’s future direction. This could lead to a cascade effect, as other investors may follow suit, intensifying the selling pressure and driving prices lower,” Hashad explained. However, the cryptocurrency market is highly volatile, and sudden price swings can occur without warning. “While the current trend of LTH selling may suggest a potential correction, it’s equally possible that the market could rebound and resume its upward trajectory. Investors should adopt a disciplined approach to risk management, including diversification, dollar-cost averaging, and setting realistic profit targets and stop-loss orders,” Hashad advised.
Christopher Lewis, an analyst at FXEmpire, believes Bitcoin is in a potential consolidation phase, with the $90,000 level acting as support and the $100,000 level as resistance. “If we pull back from here, the $90,000 level is support. And then after that, we have $80,000 where the 50-day EMA resides,” he wrote in a blog post. Lewis thinks a pullback to the $80,000 level would likely be healthy. “But I think at the very least, you’re probably going to see some sideways action. That being said, if we pull back from here, the $90,000 level is support. And then after that, we have $80,000 where the 50-day EMA resides,” he added.
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