Bitcoin price is stuck beneath $73K as BTC long-term holders ramp up distribution pressure


  • Bitcoin price topped out at $71,561 on Binance, unable to reclaim its March peak of $73,777.
  • The long-term holder cohort has ramped up their overall distribution pressure amid surging realized profit.
  • With such significant profits in play, balance between reaping profits and ensuring long-term sustainability has traders at a crossroads.

Bitcoin (BTC) price managed to recover above $70,000 after a steep fall to levels within the $62,000 range. It came on the back of increased outflows from the spot BTC exchange-traded funds (ETFs) market.

Amid reports of the London Stock Exchange working out a market for Bitcoin and Ethereum Exchange-Traded Notes (ETNs), the pioneer cryptocurrency managed to recover. Howver, the upside potential is threatened as long-term holders give in to their profit appetite. 

Also Read: ETNs, not ETFs, send Bitcoin price back above 70K as LSE plans to launch BTC and ETH markets

 

Bitcoin, altcoins, stablecoins FAQs

Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.

Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.

Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.

Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.

Bitcoin longterm holders succumb to profit appetite

Bitcoin price is oscillating between the $69,000 and $70,700 range after a remarkable recovery from the $62,000 range. The dump had provided a buying opportunity for bulls that missed the early March rally.

However, according to Glassnode analysts, the long-term holder cohort for BTC investors is ramping up their overall distribution pressure. The report ascribes this to skyrocketing realized profit, recording upwards of $2.6 billion per day in realized profit as they cash in on the gains made.

Distribution pressure is when token holders exert selling pressure on the asset. As these traders look to sell their holdings, it can lead to downward price movements. It coincides with heightened realized profit, meaning there is an increased number of Bitcoin holders who are able to sell their coins at a profit compared to when they acquired them. This could lead to:

  • Profit-taking by long-term holders after seeing a significant rise in profits
  • Increased volatility with more traders looking to take profits, causing fluctuations in price as buy and sell orders are executed

Meanwhile, analyst @CryptoCapo_ on X observes that there remains a significant liquidity zone in the BTC market, extending between $74,000 and $75,000. Within this price range, enough buyers and sellers are present and potentially could facilitate quick and efficient trades without causing drastic price movements.

For the layperson, traders often look for liquidity zones to place their buy or sell orders, as it can help them enter or exit positions more easily. Liquidity zones can also act as levels of support or resistance, influencing price movements as traders interact within those ranges.

Bitcoin price outlook as BTC investors start to take chips off the table

Bitcoin price remains bullish, but volatility is rising as the number of BTC holders in the realized profit category remains high. If Bitcoin price is able to close above the $69,000 threshold on the 4-hour timeframe, it could continue north to reclaim the $73,777 peak recorded earlier in the month.

Clearing the $73,777 all-time high could set the tone for a foray into the liquidity zone above $74,000. Such a move could encourage more buy orders among BTC bulls, propelling BTC price further north.

The Moving Average Convergence Divergence (MACD), holding above the orange band of the signal line is a bullish sign, indicating the market is still optimistic.

BTC/USDT 4-hour chart

Nevertheless, the immediate upside potential for Bitcoin price is threatened as the Relative Strength Index (RSI) is failing to show that buying pressure is dropping. If the RSI crosses below the yellow band of its signal line, the downtrend could solidify.

This could send BTC price below $69,000, or stomp it back to the $62,000 range, with likely support at $61,701. In a dire case, Bitcoin price could fall into the liquidity zone below $59,224 support.

Besides the RSI, the histograms of the Awesome Oscillator (AO) display red histogram bars, suggesting a growing bearish sentiment. With this, analysts anticipate negative price action.

As buyer momentum counters selling pressure, the balance between booking profits and ensuring long-term sustainability becomes apparent. 


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