Simply put
- Bitcoin’s recent surge hit a snag on Thursday, as it dropped below the $80,000 mark.
- CryptoQuant analysts have noted that this rally has prompted traders to take profits.
- Although it might not be immediately clear, there are suggestions that a correction could take place as the bear market persists.
Bitcoin had climbed to almost $82,500 on Wednesday for the first time since January, but it has since dropped back, trading below $82,500 recently.
This fluctuation is part of what’s being characterized as a “bear market rally,” during which Bitcoin has increased by over 17% in the last month, according to analysts. With profits rising, there is a chance of further selling pressure on Bitcoin.
On May 4, Bitcoin holders realized gains of 14.6k BTC daily, marking the highest levels since December 10. This surge followed a 37% increase from the lows in April, pushing many holders back into the profit zone.
As noted, “Historically during bear markets, spikes in realized gains at critical resistance points can precede temporary price highs or longer decline periods.”
The data from CryptoQuant shows that Bitcoin traders’ 30-day net realized profits have shifted back into positive territory. More holders are now seeing gains than losses, a significant change in market dynamics.
However, the total profit taken is only 20,000 BTC, notably lower than what would typically indicate a bull market, which ranges between 130,000 to 200,000 BTC.
This difference suggests that the market has not fundamentally changed, and it reinforces the perception of bear markets behaving similarly to bull markets.
Amid rising unrealized profits, CryptoQuant expressed concerns about increased correction risks as traders may feel pressure to secure their gains.
Despite these fluctuations, the report highlights a slowdown in perpetual futures demand, currency inflows, and a milder drop in spot demand, indicating that any correction might develop gradually. Historically, similar conditions have allowed for continued short-term price increases, even in bear market recoveries.
Recently, Bitcoin was trading around $80,150, briefly dipping to $79,692 on Thursday morning but recovering above the $80,000 threshold. Currently, Bitcoin has fallen over 36% from its peak of $126,080 in October.
Elsewhere, other significant cryptocurrencies like Ethereum and XRP also saw declines, dropping more than 2% to around $2,301 and $1.39 respectively. Over $269 million has been traded long in cryptocurrencies, anticipating price increases, according to CoinGlass, which noted liquidations in the past 24 hours.
Myriad users, on a prediction market operated by Dastan, which is connected to Bitcoin, hold an optimistic view that Bitcoin will reach $84,000 sooner than it will plummet to $55,000, with a probability of 83% as this article was being written.
