Thursday, April 18, 2024

Bitcoin Price Prediction: Can BTC Retrace Amid Increased Profit-Taking and Long Position Leverage Demand?

The upside potential for the price of Bitcoin (BTC) seems overbought, but the bulls are not backing down. According to Glassnode, data indicates increased demand for long-side leverage and profit-taking.

Increased profit-taking and a need for long-side leverage are evident in bitcoin markets.

The price of bitcoin (BTC) is surging, continuing to rise after surpassing earlier highs. “[BTC] has broken to its fourth cycle all-time high (ATH), rallying above $72k,” according to blockchain data and intelligence company Glassnode. According to the article, the action had brought emotion one step closer to ecstasy.

Researchers at Glassnode claim that there is presently a typical “wealth transfer from the HODLer cohort to speculators,” pointing to significant increases in demand for futures leverage and spot profit-taking.

Some noteworthy highlights from the report are as follows:

  • The price of bitcoin has surpassed the previous cycle ATH of $68,999.99, marking the fourth new ATH in history.
  • A number of indicators point to a startling resemblance to previous all-time high breaks, with money aggressively shifting from long-term hodlers to more recent investors and speculators.
  • Realised profit and futures financing rates have significantly increased, indicating a rise in profit booking and a need for long-side leverage.
  • Realised profit indicates the entire amount of wealth kept on-chain in BTC.
  • When the price of bitcoin reaches new all-time highs, investors who bought it early enough tend to accelerate their distribution pressure.
  • This indicates a wealth transfer from older to younger investors.
  • A healthy balance between fresh demand and distribution pressure is shown in the aforementioned dynamic.

As for the US Bureau of Labour Statistics (BLS), which released its February Consumer Price Index (CPI) inflation data on Tuesday, markets are still processing the news that the index increased from 3.1% in January to 3.2% in February. “Even without a Fed rate cut, drivers such as institutional demand will keep propelling the largest crypto token to new highs,” says Aurelie Barthere, Principal Research Analyst at Nansen.ai.

Regarding the immediate consequences of today’s US CPI report, we do not anticipate that it will bring an end to the cryptocurrency bull market just yet or have a major influence on prices in the upcoming weeks. The price and newsflow of cryptocurrencies are too positive; for example, BlackRock has assigned its own Bitcoin ETF to two of its asset management funds.

Outlook for bitcoin prices in February as US CPI inflation increases to 3.2%

The price of bitcoin is still far higher than its peak of $69,000 in 2021, and the bulls don’t appear to be slowing down. If purchasing pressure keeps building, Bitcoin may rise 12% to the crucial $80,000 mark if it is trading over the $70,000 barrier.

The rising Relative Strength Index (RSI), which is a result of the bulls’ strong presence in the Bitcoin market, indicates growing buyer momentum. The Awesome Oscillator’s (AO) enormous volumes, which are still rising, serve as proof of this. The volume indicator, which is expanding in size to show that the dominating tendency is strengthening, provides additional support for this theory.

On the other hand, given that Bitcoin is very overbought and the RSI is at 86, investors shouldn’t be shocked if the price of the cryptocurrency declines. In order to start a short position in Bitcoin, traders need to likely wait for a three-day candlestick close below the supply zone’s mean barrier of $64,044 between $62,278 and $65,618. Should the $64,044 midline be broken, Bitcoin would cross over to the $60,000 mark. This would represent a 15% decrease from the current levels.

As previously said, the market is overbought, suggesting that a possible market correction may be imminent. The Fear and Greed Index, which measures excessive greed, is now at 81.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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