Bitcoin (BTC) has pulled back from its recent high of $93,495, currently trading at $92,428, as profit-taking among investors intensifies. The ongoing decline reflects broader market sentiment characterized by “extreme greed,” signaling a potential price reversal. This phase of market sentiment, along with an uptick in selling activity among long-term Bitcoin holders, suggests that the cryptocurrency might face downward pressure in the short term.
Bitcoin’s Rally Triggers Sell-Off Among Long-Term Holders
Bitcoin's recent rally has prompted long-term holders (LTHs) to sell, a trend observed in the coin’s on-chain data. Long-term holders are typically defined as investors who have held Bitcoin for more than 155 days. According to data from Glassnode, the Hodler Net Position Change, which tracks the buying and selling activity of these holders, dropped to its lowest point in five months on Tuesday. This indicates that LTHs sold more than $3 billion worth of BTC on that day alone, marking their largest single-day sell-off since June 26.
The sell-off by LTHs aligns with Bitcoin’s recent transaction profitability. As of now, the ratio of daily BTC transactions in profit to those in loss stands at 2.01, based on a 30-day moving average. This suggests that for every Bitcoin transaction made at a loss, there are approximately two transactions made at a profit. The overall profitability of Bitcoin transactions is pushing more LTHs to realize their gains.
MVRV Ratio Indicates Bitcoin Could Be Overvalued
Further fueling concerns about a potential price correction is Bitcoin’s Market Value to Realized Value (MVRV) ratio. The MVRV ratio is a metric that compares Bitcoin's current market value with its realized value (the value of Bitcoin when it was last moved). Currently, Bitcoin's MVRV ratio stands at 182.06%, according to data from Santiment. This high value suggests that Bitcoin is overvalued, as it implies that if all holders were to sell at the current market price, they would realize an average profit of 182.06%.
With this overvaluation, some investors may be inclined to sell in the short term, locking in profits before any potential correction. As a result, Bitcoin’s price could face downward pressure if the selling activity persists.
Bitcoin Price Prediction: LTHs Hold the Key
At the time of writing, Bitcoin is trading at $92,428, slightly below its cycle peak of $93,495. If long-term holders continue to offload their holdings, Bitcoin’s price could fall further, possibly toward the next major support level below $90,000. According to the Fibonacci Retracement tool, the next significant support is at $83,983, a level that could act as a key point for a potential reversal or consolidation.
However, if the selling activity slows and new demand emerges, Bitcoin could reclaim its all-time high of $93,495 and make another attempt to break above this level. A resurgence in buying interest could lead to an upward momentum that pushes the price past its previous highs, potentially setting the stage for a new rally.
Conclusion: The Road Ahead for Bitcoin
Bitcoin's price is at a crossroads, with the actions of long-term holders playing a critical role in determining its short-term trajectory. The combination of high MVRV ratios, profit-taking by LTHs, and a market sentiment reflecting extreme greed indicates that Bitcoin may face some downward pressure in the near term. However, if new demand emerges and selling activity subsides, Bitcoin could reclaim its all-time high and continue its upward trajectory.
As always in the cryptocurrency market, volatility is high, and investors must closely monitor these indicators to anticipate price movements. With the market still teetering between profit-taking and potential demand, Bitcoin's future price direction will depend largely on how long-term holders adjust their positions in the coming days.
November 2024, Cryptoniteuae