Bitcoin: Is The Profit Fever Holding Back Its Progress?

Bitcoin is going through a phase of intense volatility. While its price flirts with historical levels, a question haunts investors’ minds: do recurring profit-taking activities really hinder its progress? It’s a dilemma the market often faces, caught between bullish euphoria and the realism of profit-taking.

Profit-taking: a natural mechanism, but a double-edged sword

When an asset like Bitcoin skyrockets, it’s natural for many holders to want to secure their gains. This “profit fever” clearly illustrates that every price rise triggers a wave of sales. But should this be seen as an insurmountable obstacle to BTC’s progression? Not necessarily.

Indeed, profit-taking doesn’t mean the end of a bullish run. It can even indicate a simple market breather phase.

Bitcoin, having already experienced significant corrections, has often shown its resilience by recovering after massive sell-offs. Long-term holders remain optimistic, supported by solid technical indicators.

“One should not underestimate the risk that consecutive profit-taking weighs on BTC’s bullish momentum.

When selling pressure combines with major technical resistances, the market can get stuck in a stagnation phase, as is currently the case around $63,900.

Do the indicators show a slowdown or a temporary pause?

Previous cycles show that every bullish period experiences significant profit-taking.

However, these intermediate corrections have never really ended the market’s momentum. On the contrary, they often served to strengthen the buyer base, eliminating weak positions and consolidating the market before the next bullish surge.

Analysts like Axel Adler note that Bitcoin may not have reached its peak yet. The LTH/STH SOPR ratio, a key indicator of profit-taking behaviors, shows that the dynamics of previous cycles have not yet been replicated.

Long-term holders, usually the most cautious, have not yet massively liquidated their positions, suggesting that the bullish trend could continue.

However, each cycle is unique. The recent approval of the Bitcoin spot ETF and the dynamics surrounding the BTC halving in 2024 could influence the market’s nature this time around.

Here are the thoughts of Ryan Lee, Chief Analyst at Bitget Research, on the matter:

The approval by the U.S. Securities and Exchange Commission (SEC) for BlackRock’s spot Bitcoin ETF options to be listed and traded carries significant implications for the crypto market and could have several impacts:

1. Increased Market Liquidity

2. Potential for Increased Price Volatility

3. Market Sentiment Driven

In summary, the listing of options products typically brings in more market participants, increases liquidity, and may enhance market confidence in the underlying asset, particularly in the case of emerging assets like Bitcoin. While this could lead to greater volatility in the short term, the presence of options generally aids in price discovery and contributes to market stability over the long term.

The $63,900 resistance: a threshold to watch

Recent Bitcoin movements show some difficulty in crossing the $63,900 mark. This level is crucial, as it represents the 200-day moving average, a technical indicator often significant for institutional investors.

As long as this resistance is not broken and turned into support, it is difficult to predict a new sustainable bullish momentum.

However, if Bitcoin manages to exceed this key zone, the potential for a new surge towards historical highs becomes conceivable. The whales, those large BTC holders, continue to take profits, but as long as the majority of buyers remain confident, BTC might withstand this selling pressure.