Key Points
- Despite a recent decline, Bitcoin’s long-term and short-term holders remain optimistic about future growth.
- With reduced BTC supply and high trading activity, the market suggests potential for a price jump.
Bitcoin [BTC], after reaching an all-time high of $109,114.8 on January 20th, experienced a 2.42% decline to $101,308.55.
However, this decline is likely a retracement, preparing the asset for another rally, given the prevailing market sentiment.
Understanding Bitcoin’s Momentum
According to Glassnode, Bitcoin’s Long-Term Holder Net Unrealized Profit/Loss (LTH-NUPL) crossed the 0.75 threshold.
This is a level associated with the “Euphoria/Greed” phase of the market cycle, indicating potential for a price jump.
Despite this, market sentiment remains positive due to continued buying activity by short-term holders.
The Short-Term Holder Market Value to Realized Value (STH-MVRV) ratio was 1.16 at press time, exceeding the 1-year trendline of 1.1.
This indicates that short-term holders are realizing a 16% profit above their cost basis, further driving the bullish sentiment.
Derivatives Market Shows Promise
The derivatives market also shows a bullish sentiment for BTC, with the Funding Rate hitting a new monthly high of 0.0350%.
This suggests that BTC’s price is likely to trend higher, as market participants align with this outlook.
Hyblock Capital’s liquidation heatmap shows BTC targeting two key liquidity levels: $106,000 on the upside and $99,200 on the downside.
Given the current market sentiment, BTC could first drop to the $99,200 level before rebounding to $106,000, potentially establishing new highs in the process.
The overall outlook for the BTC market remains optimistic with research from CryptoQuant revealing a massive outflow of 1 million BTC from exchanges over the past three years.
Such outflows indicate a reduced supply of BTC available for trading, leading to a demand squeeze and decreased selling pressure.
If these outflows continue, it could drive BTC to higher price levels, as observed during similar instances in the past.