Bitcoin has experienced a significant downturn, hitting a four-week low of $108,700. This decline is accompanied by growing concerns about market exhaustion, as indicated by on-chain analysis from Glassnode. The cryptocurrency's recent price action suggests a potential for further correction, challenging optimistic fourth-quarter rally expectations.
Key Takeaways
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Long-term holders have realized substantial profits, reaching levels typically seen at market cycle tops.
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Inflows into Bitcoin exchange-traded funds have decelerated.
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Some Bitcoin holders are beginning to sell at a loss, signaling market stress.
Signs of Exhaustion Emerge
On-chain analytics firm Glassnode has highlighted concerning trends in the Bitcoin market. Cumulative realized profit-taking by long-term holders has reached levels previously associated with major cycle tops. Specifically, long-term holders have realized $3.4 million in Bitcoin profits. This, coupled with a slowdown in Bitcoin exchange-traded fund (ETF) inflows, points towards a potential market "exhaustion" phase.
Technical Indicators Flash Warning Signs
Bitcoin's price has fallen below critical support levels around $112,000, reaching a low not seen in four weeks. Analysts suggest that the recent bounce lost momentum, and the price hovering near previous lows could trigger further stop-loss selling. This scenario is particularly concerning given that many market participants are positioned for a fourth-quarter rally, making a correction a more likely outcome than a surge.
Investor Behavior and Market Stress
Further analysis from Glassnode indicates that the Spent Output Profit Ratio (SOPR) is showing worrying behavior. Some Bitcoin holders are now selling at a loss, a pattern historically linked to significant market stress. While dips in SOPR below 1 can sometimes precede rebounds in bull markets, the current ratio of 1.01, combined with the Short-Term Holder Net Unrealized Profit/Loss (NUPL) approaching zero, suggests newer holders may be cutting losses quickly, potentially triggering liquidations.
Future Outlook for Bitcoin
Glassnode analysts conclude that without renewed demand from institutions and holders, the risk of a deeper market cooling remains high, reinforcing the notion of market exhaustion. Analysts at 10x Research remain neutral on Bitcoin unless it can reclaim the $115,000 level. Despite these bearish signals, some figures, like Michael Saylor, remain optimistic about Bitcoin's prospects in the fourth quarter, anticipating gains once macro headwinds subside. At the time of reporting, Bitcoin was trading at $109,645, marking a 6.5% decrease over the past week.
SOURCE
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Bitcoin at 4-week low in growing signs of ‘exhaustion’ — Glassnode — TradingView News, TradingView.
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Bitcoin at 4-week low in growing signs of ‘exhaustion’ — Glassnode, ADVFN Ltd.
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