Profit-Taking Panic, Short-Term Bitcoin Holders Sell Off – What’s Next For BTC?
18 Março 2024 - 8:00PM
NEWSBTC
Recent on-chain data highlighted a significant trend: a wave of
profit-taking by investors who have held Bitcoin (BTC) for less
than five months. As detailed by CryptoQuant’s latest data, this
phenomenon is not just a random market movement but an echo of
patterns observed at the zeniths of previous bull markets. Related
Reading: Bitcoin Sentiment Cools Off, Price Rebound Soon?
Profit-Taking Among Short-Term Bitcoin Holders Signals Market Shift
According to CryptoQuant, the Spent Output Profit Ratio (SOPR), a
key metric in evaluating the profit and loss of Bitcoin
transactions over a specific period, showcases a pronounced uptick
indicative of widespread profit realization. This tendency among
short-term holders to liquidate their holdings for gains parallels
historical market peaks and suggests a critical juncture for
Bitcoin. Crypto Dan, a seasoned market analyst, emphasized the
significance of this trend, stating, “This movement is something
that only happens once every few years,” highlighting the
uniqueness and possible consequences of the present market trends.
$BTC short-term investors took large profits “In relation to this
adjustment, if we look at the SOPR, there was a big movement
related to profit realization by short-term holders who held #BTC
for less than 5 months.” by @DanCoinInvestor Link
👇https://t.co/RqBtDm81hO — CryptoQuant.com (@cryptoquant_com) March
18, 2024 New Market Forces At Play: ETFs Inflow Set To Rebalance
The Equation While the SOPR metric might signal alarm bells
reminiscent of past bull market peaks, the crypto landscape is
underpinned by factors that could mitigate the traditional outcomes
of such profit-taking. Among these is the recent introduction of a
BTC spot Exchange-Traded Fund (ETF). This new avenue for Bitcoin
investment introduces a complex layer to the market’s dynamics,
potentially cushioning any adverse effects of short-term holders’
profit-taking activities. Dan concluded by noting: But considering
the BTC spot ETF and potential additional inflows from institutions
and individuals, it is difficult to judge it as simply a signal of
the peak of a bull market. After a short-term correction period,
it’s very likely that we will see a strong further bull in 2024.
CoinShares Head of Research, James Butterfill, provides a further
layer of analysis, suggesting an imminent “positive demand shock”
for Bitcoin. According to Butterfill, the delay in making spot
Bitcoin ETFs accessible to the Registered Investment Advisors (RIA)
market — a sector managing around $50 trillion in assets — is set
to end. With RIAs requiring three months of trading data before
including new ETFs in their portfolios, the market is on the cusp
of witnessing a substantial influx of new investments into Bitcoin.
“If 10% of RIAs chose to invest 1% of their portfolios, this could
result in approximately $50 billion in additional inflows,”
Butterfill elaborated, highlighting the scale of potential market
impact. Moreover, the current supply-demand dynamics within the
Bitcoin market are skewed towards increasing demand against
decreasing supply. Related Reading: Bitcoin Approaches Risky
Territory As Halving Event Draws Near The daily demand for BTC,
fueled by the trade of spot BTC ETFs and the average production of
new coins, underscores a growing discrepancy that ETF issuers are
filling by tapping into the secondary market. This scenario is
evidenced by a dramatic decrease in OTC desk coin holdings, a
direct consequence of ETF-driven demand, according to Butterfill.
Featured image from Unsplash, Chart from TradingView
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