Bitcoin (BTC) is currently navigating a challenging profit-taking phase, according to insights from CryptoQuant CEO Ki Young Ju. In the past week, the cryptocurrency has experienced a significant price drop of over 12.25%, reflecting ongoing volatility in the broader crypto market.
Young Ju emphasizes that many traders who acquired Bitcoin at lower prices during the recent rally are now opting to sell. This strategy is largely driven by the desire to secure profits, which could dampen the momentum needed for recovery and result in sustained downward pressure on prices.
The situation is exacerbated by historical trends within the Bitcoin market. Young Ju points to the Bitcoin Profit and Loss (PnL) Index, which indicates that the market is entering a bear phase. This index assesses the average purchase price for all Bitcoin holders and reveals that a significant number of wallets are currently in profit. As more traders take advantage of their gains, increased selling pressure may hinder any potential recovery.
Young Ju warns that unless a substantial event occurs to shift the current market dynamics, Bitcoin might continue to experience a prolonged cooling-off period. He suggests that macro-level liquidity is necessary to disrupt the prevailing profit-taking cycle.
The current situation bears resemblance to the market cycle observed in 2020. Despite the profit-taking trend, if a considerable influx of liquidity enters the market, it could stabilize prices and facilitate a reversal.
At the time of this report, Bitcoin is trading at $83,589.18, reflecting a 1.35% increase over the past 24 hours. Earlier in the day, it reached an intraday high of $85,503.01 before retreating to its current value. Additionally, trading volume has decreased by 22.47%, amounting to $92.2 billion.
With the Bitcoin Relative Strength Index (RSI) already indicating oversold conditions, analysts speculate that the cryptocurrency could eventually hit a low around $78,000. Some market participants, including notable figures like Raoul Pal, remain unfazed by the current volatility, viewing it as a typical cycle reset for the leading digital asset. Pal asserts that such patterns have occurred before and that Bitcoin is likely to rebound.
