Analysts at crypto data provider Glassnode say Bitcoin’s rally may still have room to run, but if history repeats itself, the cryptocurrency could face a major pullback in the coming days.
Glassnode analysts wrote in a report on Tuesday that as Bitcoin continues to break through all-time highs, the world's largest cryptocurrency has entered a new price discovery phase, with almost all of the circulating supply of Bitcoin in profit. In the early hours of Thursday morning, Bitcoin hit a record high of $93,265.24 per coin, up more than 110% so far this year.
Analysts say that historically, such rally phases last about 22 days on average before a major correction occurs, when the price of about 5% of circulating bitcoins may be pushed below the original purchase price. They point out that the circulating supply of bitcoin has remained at a high profit level for about 12 consecutive days.
Meanwhile, analysts note that these bitcoins have historically made monthly profits between $30 billion and $50 billion before demand dried up and the rally cooled. In comparison, since bitcoin entered its latest record-breaking discovery phase, realized profits have been around $20.4 billion.
“While profit-taking has been substantial, (profit levels) remain below historical peaks, suggesting there is room for further gains before underlying demand is exhausted,” they wrote.
In addition, Glassnode analysts pointed out that the current cost basis for new or short-term investors is about $66,800, which makes the upper and lower limits of Bitcoin prices approximately $94,900 and $51,600, respectively.
If Bitcoin approaches its $94,900 ceiling, it could highlight “slowing demand and the time has come for prices to become high enough for many existing holders to increase selling pressure,” the analysts wrote.
Article forwarded from: Jinshi Data
