Bitcoin's Latest Uptrend Sparks Debate: Local Top or Room to Grow?
Bitcoin's approach to $100K triggers profit-taking apprehension: What lays in store for BTC?
Bitcoin's surging momentum has sent it soaring to a two-month high, and the digital gold is currently trading around $99,287 following a 2.47% gain over the last 24 hours. However, the relentless profit-taking from investors has raised concerns that a local top might be on the horizon.
Is It Time for a Local Top?
Indeed, CryptoQuant analyst Mevsimi noticed that Bitcoin's 7DMA Net Realized Profit/Loss has consistently remained in the positive territory since early 2024, reaching over $1B per day. This persistently high profit-taking is a characteristic trait of late-stage bull markets where profiteering tends to outweigh buying.
Historically, this pattern has been a hallmark of late bull runs, as seen in 2021, which was followed by a sharp market correction. However, the current market structure seems to have shifted with increased ETF inflows. Consequently, investor psychology seems familiar but magnified. This indicates that a local top isn't imminent but could be forming, according to Mevsimi.
What's the Verdict Based on Charts Analysis?
Contrary to popular belief, our analysis indicates that there's room for Bitcoin to grow despite the exuberant profit-taking. For starters, the Long-Term Holder SOPR shows a decline from 2.5 to 1.7, signifying that the profit-taking is predominantly driven by short-term holders, not long-term investors. This suggests that we're still away from the typical local top scenario, which usually occurs when long-term holder profit-taking is markedly aggressive.
Moreover, the rise in dormant coins signals that long-term holders are still bullish and intend to hold on to their positions. This suggests that they are absorbing pressure from short-term holders. Lastly, Bitcoin's MVRV, which is a good indicator of a market top, remains within a normal range around 2.1. Historically, a market top emerges when the MVRV surpasses 2.5, a level that hasn't been reached yet.
What Does the Future Hold?
After breaking out of the $97k resistance, Bitcoin's next target is expected to be $100k. However, if the current uptrend is merely a price pump before a correction, signaling a local top, then we could see Bitcoin drop to $94k.
Takeaways
While the continued profit-taking among investors has reignited discussions about a local top, a thorough analysis suggests that Bitcoin still has more room for growth. As the trend picks up speed and volume, it's essential to monitor the indicators closely and adjust investment strategies accordingly.
- The current surge in Bitcoin's value, trading at around $99,287, has sparked debate about whether it represents a local top or room for further growth.
- A CryptoQuant analyst, Mevsimi, has noted that persistent high profit-taking in Bitcoin is a characteristic of late-stage bull markets, but suggests that a local top isn't necessarily imminent due to increased ETF inflows and the dominance of short-term holder profit-taking.
- In contrast to some beliefs, analysis indicates that there's still potential for Bitcoin to reach $100k, as indicated by factors such as the declining Long-Term Holder SOPR, the rise in dormant coins, and a relatively normal MVRV ratio that hasn't yet reached a level typically associated with a market top.
