With Bitcoin Holders Taking Profit, Where Can Price Go From Here?

Key Insights:

• BTC has retested the $39K level.
• After BTC reached the $47K level, short-term holders took profits, increasing sell-side pressure.
• A push from bulls in the near term could still aid BTC’s short-term price rise.

After a break-out from the multi-month consolidation range, bitcoin’s price saw a pullback last week. In merely ten days, bitcoin’s price dropped by over 15%. Even though a short-term pump pushed BTC up by 2% on April 13, the coin still traded at $39,788.07 at press time.

Heading for Another Downtrend?

The crypto market has missed BTC’s sudden price jumps and double-digit gains that made investor portfolios fat. Over the last ten days, BTC has been dropping impulsively after facing rejection from the 200-day moving average.

The 200-day moving average, around the $47,000 level, has acted as a strong resistance. However, BTC price broke below the 50-day, 100-day, and 200-day moving averages confirming the bearish trend.

This bearish turnover came after a modest price break-out from the multi-month consolidation range that was established in mid-January. Nonetheless, data from Glassnode highlights that the recent on-chain activity and spending behaviors have been suggestive of investors taking profits during the recent rally.

Bitcoin Holders Taking Profit

The number of active entities remains within the bear market channel that has been established over the last six years. Furthermore, the current active entity count of 296k/day is at the upper end of this channel, and a sustained expansion higher could be constructive.

Glassnode data also pointed out that on-chain activity wasn’t extraordinary, suggesting that there is little growth in the user base, minimal inflows of new demand, and the market remains largely HODLer dominated.

Additionally, investor spending behavior appeared to be switching from dominance of loss realization towards a modest amount of profit-taking. Notably, 58% of transaction volume realized a profit as sellers in the market rose.
Aggregate Bitcoin transaction fees are currently near all-time-lows due to a confluence of factors, including SegWit adoption, transaction batching, and the aforementioned lack of demand for bitcoin block space.

Nonetheless, USD denominated miner revenue was up 150% after the last halving event, and both hash-rate and protocol difficulty set consistent all-time-highs, which was a positive long-term development.

One relief in the current situation could be that the recent bear market is not as severe as the worst phases of all prior cycles, with just 25% to 30% of the market being at an unrealized loss. At press time, as the price sank under the $40K mark, further sell-side pressure drove the market and BTC price lower. The same pulled more of the market into an unrealized loss like prior cycles.

Due to the recent low BTC prices, short-term holders that acquired coins between $33K and $42K have returned to an unrealized profit. It was seen that since these investors saw value in that price range, sell-side pressure rose.

BTC Price Action

At press time, price fall under the $40k mark presented further tension in the market. If the price fails to break back above the psychological barrier at $40K, a retest of the $36K area in the short term would be more probable.

On the other hand, in the short term, if the price could break back above the $47K supply zone, a continued uptrend could be anticipated. At press time, RSI on a daily for bitcoin presented higher domination of sellers in the market.

A recovery in short-term RSI could also indicate a reversal in the near term.