Key Points
- Bitcoin’s short-term holders could delay the cryptocurrency’s all-time-high (ATH) despite bullish trends.
- Technical indicators show strong bullish momentum for Bitcoin.
Bitcoin (BTC) experienced a 9% gain within a week, trading at $68,388 at the time of press. On October 18, Bitcoin reached a two-month high above $68,900, boosting optimism for further gains.
Several factors such as the U.S elections’ outcome and high inflows to Spot Bitcoin exchange-traded funds (ETFs) can support Bitcoin’s rally to an ATH. However, the actions of short-term holders are a critical determinant of Bitcoin’s journey to record highs.
Short-term Holder Behavior
After Bitcoin spiked to a two-month high, on-chain metrics indicated that short-term holders began selling. Data from CryptoQuant showed an increase in Bitcoin exchange inflows from traders who held Bitcoin for between one and three months. This surge can be seen as a sign of profit-taking behavior as short-term traders look to capitalize on the favorable market conditions.
The short-term holder Spent Output Profit Ratio further highlighted that these traders have been selling BTC at a profit. While an SOPR ratio above 1 suggests that the general market sentiment is positive, it could also mean a high likelihood of profit-taking. If Bitcoin’s uptrend shows signs of weakness, this cohort will likely start selling more, causing a price reversal.
Another group that could delay a Bitcoin ATH are the 1.9M addresses that bought BTC between $66,900 and $69,200. These addresses were at a break-even point at press time. As Bitcoin approaches $69,000, these addresses might start selling once they turn in a profit.
Technical Indicators
Bitcoin’s daily chart projected strong bullish momentum at the time of writing. The Relative Strength Index (RSI) at 68 indicated that buying pressure was strong. The RSI has also been making higher highs, further suggesting that the uptrend may be gaining strength.
On-balance volume has also been tipping upwards and trending above the smoothing line. This seemed to reinforce the bullish sentiment as it showed capital has been flowing into Bitcoin. This could spike buying activity and stir gains.
If these bullish signs persist and Bitcoin breaks above $69,000, the next resistance level would lie at $75,250, at which point Bitcoin will have formed a new ATH. Conversely, if profit-taking activities continue, the asset will likely drop to test support at the 0.618 Fibonacci level ($65,130).
Some traders are already anticipating such a drop. Data from Coinglass revealed that 60% of open positions are short sellers betting on a failed uptrend.