💥Bitcoin's bull run could still continue, but the cryptocurrency is likely to face a major bout of profit-taking in the coming days if history repeats itself, according to analysts at Glassnode.
👉The largest cryptocurrency has entered a breakout phase as it continues to break all-time highs, putting nearly all of bitcoin’s circulating supply in profit, analysts at Glassnode wrote in a note on Tuesday. The coin hit a record high of $93,477 on Wednesday, and shows no signs of stopping.
👉According to analysts, such periods have historically lasted an average of about 22 days before a major profit-taking event occurs, with about 5% of the circulating supply potentially being pushed below the initial purchase price. They note that the current rally has remained at a high profit level for about 12 consecutive days, which is the first sign that Bitcoin prices could soon decline.
💥The second sign is the level of profits bitcoin has generated. Monthly realized profits have historically ranged from $30 billion to $50 billion before demand dried up and the rally cooled, analysts note. Realized profits have reached about $20.4 billion since bitcoin entered its latest record-high discovery phase, analysts say.
👉While profit taking has been significant, prices remain below historical highs, suggesting prices still have room to rise further before reaching levels where underlying demand is exhausted,” they wrote.
👉Furthermore, the current cost basis for new or short-term investors is around $66,800, with the upper and lower bounds at around $94,900 and $51,600, Glassnode analysts noted.
If bitcoin approaches the upper band at $94,900, it could signal “a time when strong demand is slowing down and the price is high enough for many current holders to increase selling pressure,” which is also the final sign investors should watch out for.
