As a seasoned researcher who has navigated through numerous market cycles and trends, I can say with a degree of certainty that the recent surge in Bitcoin’s price is indeed intriguing. The fact that more than 90% of Bitcoin holders are now in profit is a clear indication of an overheated market, which, as history has shown us, often precedes or coincides with corrections.
Over the past week, Bitcoin’s (BTC) price has surged by over 7.5%, reaching a 10-week peak of $67,922 on Oct. 15. Nevertheless, there’s a chance that a significant downturn could occur in the near future given various technical and onchain indicators.
As a crypto investor, I’ve noticed an exciting surge in the recent Bitcoin price recovery. This uptick seems to be driven by a remarkable increase in investments flowing into spot Bitcoin exchange-traded funds (ETFs). Over the past couple of days, these ETF inflows have soared beyond $926 million, which is truly impressive!
Over 90% of Bitcoin’s holders are now in profit
The surge past $67,000 in Bitcoin’s current trend has caused its price to surpass the average purchase price for short-term holders, resulting in these investors turning some of their potential losses into profits as they sell their Bitcoins at a profit.
According to data presented by market analysts Into The Cryptoverse, it was found that approximately 8.5% of Bitcoin investors were still facing a loss when the price peaked at $66,870 on October 16th. This meant that these losses accounted for just about 8.5% of the total Bitcoin supply, while an impressive 91.5% of all Bitcoin holders were enjoying profits at that time.
In simpler terms, the proportion of supplies that show a profit or loss is determined by comparing the price at which unspent transaction outputs (UTXOs) were last transferred with their current market value.
Should Bitcoin’s value keep climbing from its present position, an increasing number of investors stand to benefit. However, when many investors are in profit, this is frequently perceived as a signal of a market that’s running hot, usually followed by or occurring alongside price adjustments (corrections).
Consequently, the current on-chain signal could lead to temporary decreases in Bitcoin’s value during the upcoming days, as traders opt to cash out their earnings.
Bitcoin futures OI hits new record high
In September, Bitcoin futures open interest rose sharply, peaking at $35.6 billion on Sept. 26. However, the price failed to break the $66,000 resistance and was followed by an 11.5% correction in 12 days.
In the same vein, as the price surpassed $67,000 recently, the open interest has climbed by approximately 20.6% since October 3, reaching a record high of $38.4 billion on October 16, based on data from CoinGlass.
As a researcher, I’d like to highlight that the open interest for Bitcoin CME futures reached an unprecedented level of 172,430 BTC, equivalent to around $11.53 billion at the point of this writing.
Vetle Lunde, a senior analyst at K33 Research, stated his view that the current institutional preference is driving increased investment in Bitcoin.
“Alongside the wild surge in open interest, futures premiums have climbed to 5-month highs.”
Given the high interest in Bitcoin (BTC) futures contracts right now, some investors are considering if a decline comparable to the one seen towards the end of September might occur.
Bitcoin price hits resistance at $68K
Technically speaking, the price of Bitcoin seems to be encountering resistance at around $68,000. Previously, when it was rejected from this price point on July 29, a significant drop occurred, amounting to approximately 27%, taking the price down to $49,577. This indicates that the sellers might intensify their defense in this area again.
To keep the upward trend going, Bitcoin enthusiasts need to secure a strong daily closing point beyond this specific level.
If the price isn’t successfully raised above $68,000 within the next few days, it might lead to a decrease, and the liquidation of long positions could potentially push the price down towards $61,000.
According to CoinGlass’s data, there was an accumulation of sell orders stacking up at around $68,000, emphasizing the significance of that region as a potential resistance point.
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2024-10-16 12:39