Bitcoin (BTC) has seen significant price movements recently, with the cryptocurrency trading at $68,388 as of the latest data, marking a 9% increase in just a week. On October 18th, Bitcoin reached a two-month high above $68,900, instilling optimism among investors for further price gains.
Various factors are converging to drive Bitcoin towards its all-time high (ATH). Factors such as the market’s anticipation of the U.S. election outcome and substantial inflows into Spot Bitcoin exchange-traded funds (ETFs) are contributing to the positive sentiment.
Nonetheless, the actions of short-term holders play a crucial role in determining how quickly Bitcoin can reach new record levels. Following the recent surge, data from CryptoQuant indicates a rise in Bitcoin inflows from traders who have held the cryptocurrency for one to three months, signaling a possible shift in sentiment among this group.
Assessing the Behavior of Short-Term Holders
The increase in exchange inflows of Bitcoin from short-term holders can signify a tendency towards profit-taking in response to the current favorable market conditions. The rising Spent Output Age Bands for this cohort as Bitcoin neared $69,000 underscore this trend.
Furthermore, the Spent Output Profit Ratio for short-term holders suggests that they have been selling Bitcoin at a profit, with the metric consistently above 1 for an extended period. While a ratio above 1 generally indicates positive market sentiment, it also signals a heightened probability of profit-taking activities.
In addition to short-term holders, another group of interest includes the 1.9 million addresses that acquired Bitcoin between $66,900 and $69,200. These addresses, as per IntoTheBlock data, are currently at a break-even point and might start selling once profits are realized, potentially acting as a barrier to Bitcoin’s upward momentum.
Despite the potential impact of short-term holder behavior, Bitcoin remains resilient, with the cryptocurrency now just 7% away from its ATH.
Bullish Signals from Technical Indicators
Analysis of Bitcoin’s daily chart reveals robust bullish momentum, with the Relative Strength Index (RSI) at 68 indicating strong buying pressure. The RSI’s pattern of higher highs suggests a strengthening uptrend.
The on-balance volume, trending above the smoothing line, supports the bullish sentiment by indicating a flow of capital into Bitcoin. This influx of capital could drive increased buying activity and bolster price gains.
If the current bullish trend persists and Bitcoin breaches the $69,000 mark, the next resistance level stands at $75,250, potentially setting a new ATH for the cryptocurrency. On the other hand, continued profit-taking may lead to a price correction towards the 0.618 Fibonacci level at $65,130, as evidenced by short sellers positioning for a downturn.