Remember when Bitcoin formed a double top in 2021? It was followed by one of the most intense crypto winters. Well, Bitcoin just formed a double top, indicating that the next few weeks could be bearish.
Bitcoin had already pulled back considerably from its recent ATH achieved earlier in the week. It traded at $103,482 a pop at the time of observation, and could soon drop below $100,000.
Sentiment around this possibility is also on the rise and could feed into those expectations, thus fueling sell pressure.
But is the double top enough signal for market direction? Some recent observations may support this outcome.
Long-Term Bitcoin Holders are Taking Some Profits off The Table
According to a recent CryptoQuant analysis, long term holders have been selling some of their BTC. This is unsurprising considering that BTC achieved a new ATH earlier in the week and sell pressure usually ensues after such a milestone.
The analysis was based on the long term holder SOPR (Spent Output Profit Ratio). Its 30-day Moving average revealed that long term holders were HODLing between March 2024 and August 2024.
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The long term holder SOPR confirmed that profit-taking has intensified ever since the Q4 Bitcoin rally kicked off. Profit-taking by long term holders is quite common during the bull market.
Note that the same analysis revealed that long term BTC holders are still holding on to a significant chunk of their coins despite increased selling. This suggests that they still anticipate more downside.
The short term holder SOPR (30-day MA) also indicated increased focus on shprt term selling. It however, noted that the SOPR values were still below 1.6. Prices above 1.6 typically confirm when the bull market is in its late stages.
What Does the Analysis Mean for BTC’s Price Action?
The focus on short term sell pressure as per the SOPR analysis aligns with the recent outflows observed in the spot market for 6 consecutive days. However, it is worth noting that there are numerous other variables at play.
Among those variables include new catalyst events which could limit Bitcoin’s potential downside. One of the most anticipated of those catalysts is the announcement of a Bitcoin strategic reserve in the U.S.
In addition, positive ETF flows and optimism about the future has been encouraging BTC holders to HODL in anticipation of higher prices.
Especially considering the high price predictions made by some of the authorities in the investment landscape.
Meanwhile, the rising level of profit-taking observed recently among long term holders may not necessarily prevent BTC from higher prices.
The same indicator demonstrated similar observations during the previous bull run and price still soared higher.
The return of market excitement observed recently can be a double-edged sword.
This is because heavily bullish sentiments also attract market manipulation which leads to leverage shakedown. Unexpected short term pullbacks should therefore not be surprising.