The Decrease in Profit-Taking for Bitcoin: A 93% Plunge Since December
At the commencement of November, Bitcoin’s value was at $68K. However, within a mere two months, it surged drastically to reach a new record high of $109K, marking a significant 60% increase.
Given such substantial gains, it was inevitable that profit-taking activities would occur. In the month of December alone, investors withdrew a remarkable $3 billion in profits.
Presently, the market is eagerly anticipating a potential resurgence. Otherwise, simply holding onto Bitcoin at the $100,000 mark could turn into a nightmarish scenario.
Will FOMO or Greed Take the Lead?
Traders are displaying a decreased appetite for risk in the derivatives market, with the leverage ratio rapidly diminishing. This trend signifies uncertain sentiments regarding the future price action of Bitcoin. Moreover, there has been a noticeable decline in the movement of Bitcoin out of exchanges.
In reality, the outflows from exchanges experienced a noteworthy 16% decline within a single day.
Collectively, these factors suggest a diminishing prevalence of FOMO. Nevertheless, greed has resurged from its previously “extreme” levels, indicating a bullish trend. Why is this the case? It’s likely that profit-taking activities are approaching a peak, as highlighted by a recent Glassnode report.
According to the report, profit-taking has drastically reduced from $4.5 billion in December to a mere $316 million presently – a plummet of 93%. Based on CryptoCrypto’s analysis, a potential return of FOMO coupled with a decline in excessive greed could pave the way for a substantial price surge.
An Insight into the Bitcoin Market
While Bitcoin recorded a 3.26% decline within a day, the market has not yet reached an overheated state. Consequently, robust buying activities, possibly driven by FOMO, will be essential to drive the price upwards once again.
However, the imminent FOMC meeting could hold significant implications for Bitcoin’s recovery. With the meeting looming just a week ahead, uncertainties are likely to linger, dampening the prospects of a swift rebound in the short term.
Curiously, this period of consolidation could be viewed as a positive indicator. It creates an opportunity for institutions to quietly accumulate Bitcoin while the market steadies itself post a period of substantial profit-taking.
The pivotal factor lies in the actions of the Federal Reserve. Should there be a rate reduction, the dynamics could become intriguing. Conversely, a surprise move might trigger a further decline in Bitcoin’s value.
Presently, the market is displaying promising signs of resurgence. Greed is resurfacing, while profit-taking activities are calming down. These developments could spark a fresh wave of buying interest, particularly once the outcomes of the Fed’s decisions become clear.
It is advisable to closely monitor the U.S. economic calendar, as it will ultimately dictate whether extreme greed prevails or FOMO stages a comeback.