- Bitcoin was trading around $98,000 at the time of writing.
- The sentiment surrounding it remained positive.
Like Bitcoin [BTC] inch closer to the psychological milestone of $100,000, market participants are keeping a close eye on on-chain metrics to decipher the dynamics at play.
While profit-taking activity by long-term holders (LTHs) is evident, the surge in demand for spot Bitcoin ETFs is balancing the equation.
The interplay between these factors could determine BTC’s price trajectory in the short to medium term.
Bitcoin’s Long-Term Holder Activity and Profit Taking
The behavior of LTHs is crucial to understanding Bitcoin’s market stability. Analysis of data from the Long-Term Holder Position Change chart indicated a notable increase in distribution.
There has been a sharp decline in LTH net positions in recent weeks. The Glass junction The chart showed that there was significant profit taking that marked this phase.
The shift from accumulation to distribution is common during bull markets as LTHs capitalize on their long-term holdings.
Source: Glassnode
Adding context to this trend is the Long-Term Holder Spending Binary Indicator. The metric, which indicates the risk levels of LTHs in terms of profit realization, currently reflects a ‘high risk’ zone of around 0.8.
Historically, similar risk levels have coincided with local price spikes, indicating caution among investors banking on a sustained rally above $100,000.
Demand for Bitcoin ETFs Balances Selloff
Counterbalancing the LTH sell-off is strong demand for Bitcoin ETFs. The Spot ETF Position Change chart highlights consistent inflows, with over 450,000 BTC allocated to ETFs in the past month.
This influx underlined the interest of institutional investors, who view ETFs as a simplified entry point into the crypto market.
Source: Glassnode
The ETF flows play a crucial role in absorbing the selling pressure.
In October, as LTH distribution intensified, ETF holdings saw their sharpest increase in months, indicating that demand from new participants and institutions could support Bitcoin’s price momentum.
BTC indicators indicate a bullish continuation
Bitcoin’s daily chart painted a promising technical outlook.
The price remained well above the major moving averages, with the 50-day and 200-day moving averages providing strong support levels at $74,000 and $65,000 respectively.
Furthermore, the Bollinger Bands suggested increased volatility, with BTC trading near the upper band – a sign of bullish momentum.
Source: TradingView
Momentum indicators such as the MACD and RSI further confirm the positive sentiment.
The MACD was in bullish territory, with the histogram showing growing momentum, while the RSI was at 81, indicating overbought conditions.
Despite the overbought figures, historical price trends suggest that Bitcoin can sustain rallies during bull runs under such conditions.
The interplay between profit-taking by long-term holders and demand from spot Bitcoin ETFs points to a balancing act in the market.
Read Bitcoin’s [BTC] Price forecast 2024-25
While there is a risk of a correction due to increased LTH activity, institutional capital inflows through ETFs could support Bitcoin’s bullish momentum.
As BTC approaches $100,000, these metrics will be critical in shaping its path forward.