The momentum of Bitcoin (BTC) remained lackluster as it stayed close to the $96k level. A recent analysis has shed light on a potential reason behind this trend and suggested that this may persist in the near future.
Strategy of Bitcoin Long-Term Holders
Following a peak at $97k on December 2nd, Bitcoin’s value dropped to $94k before experiencing a slight bullish pushback, crossing the $96k threshold once more.
This price action indicated a period of consolidation within this range, failing to meet investor expectations of breaching the $100k mark.
Alphractal, a data analytics platform, highlighted in a tweet how the actions of long-term Bitcoin holders could be impacting the cryptocurrency’s price.
According to the tweet, these long-term holders have been distributing significant amounts of BTC at a profit, increasing short-term selling pressure. This behavior is evident from the Long Term Holders SOPR indicator.
Moreover, since late 2023, the wallet addresses of these holders have consistently shown high profitability levels, as indicated by the Long Term Holders NUPL Heatmap.
This suggests that long-term holders may look to secure more profits, potentially driving up selling pressure, which could explain Bitcoin’s current consolidation. This pattern has been observed in previous Bitcoin cycles as well.
The tweet mentioned,
“It’s worth noting that this distribution phase by Long-Term Holders might extend over several months, as seen in past cycles. This highlights their method of leveraging bullish cycles to realize profits from BTC held inactive for more than 155 days.”
Will Bitcoin’s Consolidation Continue?
Given the analysis indicating potential profit taking, CryptoCrypto explored other datasets to determine if they also predicted a similar future scenario that might hinder Bitcoin’s upward momentum.
According to Glassnode’s data, Bitcoin’s seller exhaustion metric began to decrease after reaching its peak. Historically, a decline in this metric has been followed by minor price increases.
The Pi Cycle Top indicator pointed out a market top for Bitcoin exceeding $124k. Therefore, if profit taking diminishes and buying pressure increases, it wouldn’t be far-fetched to anticipate Bitcoin reaching $100k in the upcoming weeks.
Furthermore, it was observed that Bitcoin’s price was forming a bullish ascending triangle pattern. A successful breakout above this pattern could potentially initiate a new bull run.
The odds of this occurring seemed favorable, as the Relative Strength Index (RSI) displayed an upward trend, signaling a rise in buying pressure with the potential to drive Bitcoin’s price higher.