- Bitcoin is showing multiple signs that the market is still in the short-term profit-taking phase.
- Long-term expectations remain strong and liquidations are rising due to an unexpected downturn.
The idea that Bitcoin [BTC] could move from a focus on short-term profit-taking to long-term hodling, has been circulating in recent days. The market may have reacted to these expectations, but what if short-term profit-taking is still in effect?
How much are 1,10,100 BTCs worth today?
Let’s summarize Bitcoin’s latest performance to fully understand the situation. Bitcoin has been on the rise since mid-September, gaining 21% year to date from a low of $24,920. This rally, at the time of writing, peaked at just over $30,000 in the last 24 hours.
Source: TradingView
The rally is already starting to show signs of a possible pullback, but this was not surprising given that the price peaked at the August resistance level. But that is not everything. The Relative Strength Index (RSI) shows that the increase in the past 24 hours has entered oversold territory. Interestingly, the latest rally occurred despite outflows in the Money Flow Index (MFI), further increasing the chances of a reversal.
A leverage shakedown as the long-term outlook shows confidence
Note that BTC has already retreated below the $30,000 price level. But it raises the question of whether selling pressure increased. Currency flows have fallen in recent days after peaking on October 16. The latest exchange rate data showed that demand was slightly higher than the amount of selling pressure reflected in foreign exchange inflows.
Source: Glassnode
Despite higher foreign exchange outflows, we also need to determine whether the continued selling pressure has enough momentum. A review of whale activity is a good place to start as they have a substantial impact on price action. Glassnode data shows that whales have been gathering since mid-October.
The latest data also showed that the number of addresses holding at least 10,000 BTC rose to a new monthly high. Addresses with less than 10,000 BTC but more than 1,000 BTC have decreased by 1 address according to the latest analysis.
Source: Glassnode
The above findings suggested that Bitcoin may not experience substantial selling pressure from whales. But where does the selling pressure come from? Well, as previously noted, the market is shifting in favor of a long-term focus.
Such an outcome will undoubtedly encourage more people to engage in long-term leveraged trades. Leveraged liquidations could therefore contribute to the ongoing selling pressure.
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Additionally, market data showed that long liquidations exceeded $200 million in the past 24 hours. The cumulative potential liquidation peaked at $7.16 billion. Please note that this represents data about Binance only.
Source: Hyblock
After the pullback, a drop in the level of leverage was observed. However, cumulative potential liquidation fell to $5.46 billion after the slight decline. This indicates that a significant number of leveraged long positions still exist. As such, bullish expectations remain high in the futures segment.