- Bitcoin reached a notable short-term zone, raising the possibility of short-term profit-taking.
- Recent sales shocks have left retailers on the sidelines. Will Price Discovery Cause the Next Wave of FOMO?
Bitcoin [BTC] jumped above $66,000 for the first time in three weeks on July 17, building on a strong bullish wave fueled by multiple factors, including Trump surviving an assassination attempt.
This new rally has raised hopes among BTC holders for a possible push into price discovery.
While the latest bullish performance signals a return of confidence among Bitcoin investors, not everyone is convinced it will be a smooth ride to a new ATH.
BTC pump has so far exceeded the realized price of the short-term holder. A situation that could turn the tide or create a sales wall.
The price overshoot above the short-term holder realized price signals that Bitcoin’s short-term traders could be forced to take profits. However, expectations of more upside potential would fend off the bears, especially if there isn’t enough excitement in the market.
Retailers are still on the sidelines
Data also shows that retail participation in the latest rally was low. In other words, whales and institutions fueled the rally we have witnessed over the past two weeks.
A sign that the retail industry is still fearful of the impact of the Mount Gox Bitcoin sell-off.
What we know so far is that Bitcoin is about $8,000 away from a significant rally. There is also room for more upside potential before the next major resistance level is retested.
However, profit-taking from investors who bought the dip is likely to see some resistance and a possible pullback in the coming days.
For now, any incoming sales pressure has to contend with strong demand institutions delve into Bitcoin ETFs. The retest of prices below $60,000 provided an unexpected opportunity for many whales and retail investors to change the average dollar price in Bitcoin.
What does the current market environment mean for Bitcoin?
Bitcoin’s bearish conditions through most of June and the first week of July may have eroded retail investor confidence. This could explain why we are seeing low participation, along with prolonged high interest rates that have negatively affected retail purchasing power.
On the other hand, demand from institutions can revive excitement in the market. This coincides with observations indicating that demand for long-term bonds is also increasing.
Read Bitcoin’s [BTC] Price forecast 2024-25
The growing supply of long-term Bitcoin holders is a healthy long-term signal that could support expectations of higher prices.
Sustained upside would pave the way for retail FOMO within days or weeks. A situation that could open up even more opportunities for liquidations and potentially significant withdrawals.