Bitcoin Price Dynamics: Over 94% of Holders Now in the Green
Bitcoin Price Dynamics – Bitcoin has seen a significant rally, pushing its price above the previous high of $69,000 from 2021, leading to a situation where over 94% of Bitcoin holders are now in profit. However, this spike raises questions about potential profit-taking at this critical price level in the short term.
Profits Surge: 94% of Bitcoin Supply in the Green
Recent data from CryptoQuant, analyzed by independent analyst Axel Adler Jr, indicates that a staggering 94% of all Bitcoin supply is currently in profit, with most coins purchased around the $55,000 mark. Checkmate, an analyst at Checkonchain, noted that “Short Term Holders (STHs) have been rewarded for buying the consolidation dip in recent months,” adding that most STHs now have the majority of their holdings “back in the money.”
This situation reinforces a Buy-the-Dip mentality among investors, acting as a positive sentiment for the market. Historically, such high levels of Bitcoin supply in profit often precede significant price corrections, suggesting that profit-taking may occur at these elevated levels.
Historical Precedents for Profit-Taking
When Bitcoin’s profitability metrics reached similar highs in late September, the price dropped by 8.7%, from $65,800 on September 28 to below $60,000 by October 3 as investors capitalized on short-term gains. A comparable scenario unfolded in March 2024, when Bitcoin hit new all-time highs exceeding $73,800, buoyed by capital inflows into US-based spot Bitcoin ETFs and anticipation of the upcoming 2024 Bitcoin halving event. The aftermath was a notable 23% decline in price, dropping from $73,835 to a low of $56,500 by May 1.
These patterns are consistent with past bull cycles, where high levels of Bitcoin supply in profit following the bull markets of 2017 and 2021 led to subsequent bear market phases.
Major Resistance at $69,000
Despite the recent bullish price recovery, Bitcoin faced resistance at the $69,000 mark. Jusko Trader, a Japanese trader, commented in an October 22 post on X, stating, “$BTC is currently facing resistance from a major liquidity zone.” This zone, between $67,300 and $69,400, has proven to be a significant barrier over the last six months.
At the time of writing, Bitcoin was trading below this resistance zone at $67,200. However, Jusko Trader suggested that the recent drop was a “healthy” pullback, indicating that BTC’s bullish momentum remains intact. He remarked, “BTC’s bullish momentum is more. These minor corrections are healthy for major pullback as they bring more/new cash flow.”
Potential Liquidations and ETF Inflows
Approximately $1.65 billion worth of leveraged short positions across all exchanges could be liquidated if Bitcoin rises above the $68,000 mark. This potential surge could be supported by increasing inflows into US spot Bitcoin exchange-traded funds (ETFs) in the coming days.
According to data from Farside Investors, inflows into US spot BTC ETFs have been gaining momentum since October 11, reaching $21.2 billion in cumulative inflows by October 22.
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