Bitcoin drops under $50K as on-chain data and BTC market structure hint at profit-taking
After topping $50,000, multiple data points suggest that Bitcoin investors are beginning to consider taking some profit.
Bitcoin
BTC
tickers down
$49,888
breached $50,000 on Feb. 12 for the first time since December 2021 after rallying 15% in February.
However, as shown on the daily chart, BTC currently faces overhead resistance at $50,000, and the price retraced by over 2% on Feb. 13 after the United States Consumer Price Index report indicated 3.1% annual inflation, which was higher than the consensus expectation.
Bitcoin is “close to another transitional phase”
Bitcoin holders have enjoyed a positive start to 2024, but data from blockchain analytics firm Glassnode suggests that the market may enter a transitional phase. Long-term BTC holders have spent more than 300,000 BTC since November 2023.
Since 2021, Bitcoin has registered a daily close above $50,200 for only 141 days, accounting for 2.84% of its trading history. The current price puts a majority of investors in a favorable position, where they may start taking profits. In fact, only 13% of the total supply is in a state of loss above $48,000. This data set coincides with BTC’s recent unspent transaction output (UTXO) ratio data.
UTXO refers to a transaction output that can be used as input in a new transaction. The UTXO ratio is defined as the number of transactions in profit or loss by comparing the price when a particular UTXO was created or destroyed.
When the UTXO ratio is high, it means the coins haven’t moved since they were created during that transaction. After BTC reached $50,000, the UTXO ratio reached 96.62%, which signaled that investors were beginning to see more profit.
On the other hand, short-term holders (STHs) have undergone a reset. During the spot exchange-traded fund (ETF) rally, the STH supply in profit peaked at 100%, but BTC’s correction to $38,000 reduced its average to 57.5%.
Bitcoin ETF inflows soar
Meanwhile, spot Bitcoin ETFs witnessed high net inflows last week. According to Bloomberg senior ETF analyst Eric Balchunas, the net cumulative flows for 10 ETFs reached over $3 billion. Additional data from a CoinShares report also highlighted that the total crypto assets under management reached $59 billion, the highest since 2022.
The strong Bitcoin ETF inflow has pushed the Coinbase premium index into a premium, indicating rising buying pressure on the exchange.
Bitcoin: Coinbase premium index. Source: CryptoQuant
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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Bitcoin soaring past $50K without retail FOMO and high leverage is good for BTC
Bitcoin price rallies above $50,300 in the absence of retail trader FOMO and the use of high leverage. Cointelegraph explains why this is important.
Bitcoin soaring past $50K without retail FOMO and high leverage is good for BTC
Bitcoin price rallies above $50,300 in the absence of retail trader FOMO and the use of high leverage. Cointelegraph explains why this is important.
Bitcoin price increased by 17.5% over the past seven days and traded above $50,000 for the first time since December 2021. Feb. 12’s Bitcoin price action can be partially attributed to inflows to spot Bitcoin exchange-traded fund (ETF) funds, which began trading on Jan. 11, but are the current inflows strong enough to justify further Bitcoin
BTC
tickers down
$49,897
gains above $50,000?
The world’s largest mutual fund managers — including BlackRock, Fidelity and ARK 21Shares — have successfully launched spot Bitcoin ETFs, and the instruments surpassed $10 billion in assets in less than a month. Over the next couple of months, spot Bitcoin ETF inflows are expected to increase as trading firms complete their due diligence on the newly launched investment vehicles
With Bitcoin hitting new multiyear highs, let’s take a look at how retail investors feel about the crypto and macro markets on Feb. 12.
Retail traders keep an eye on macro and crypto
Traders’ focus remains on the macroeconomic scenario after the S&P 500 closed above 5,000 points on Feb. 9 for the first time in history, following a 13.9% gain in three months. The bullish momentum might temporarily pause as investors analyze a handful of companies expected to report quarterly numbers this week, including Coca-Cola, Airbnb, Coinbase and DoorDash.
United States inflation Consumer Price Index data is also due on Feb. 13 and will guide the U.S. Federal Reserve’s interest rate path. The market consensus points to multiple cuts from the current 5.25% level, which could incentivize investors to move away from fixed-income assets.
However, there’s no guarantee that a migration to risk-on assets would benefit cryptocurrencies. For instance, Google searches for the phrase “buy Bitcoin” have been stagnant for the past couple of weeks, indicating that the asset might be distant from garnering mainstream attention despite easier access through spot ETF.
Data suggests that retail traders typically lag behind bull runs, usually entering the cycle a couple of days or weeks after major price milestones. However, other metrics, such as the demand for stablecoins in China, show no increase in retail trader activity. Excessive retail demand for cryptocurrencies typically causes the stablecoin premium to soar above 1.5%, while bear markets lead to a discount.
USC Coin (USDC) peer-to-peer trades vs. USD/CNY. Source: OKX
Presently, the USD Coin
USDC
tickers down
$1.00
stablecoin is trading above the official U.S. dollar currency, sustaining a 1% premium for the past four weeks. Bulls could interpret the lack of excitement as a positive indicator, meaning the typical FOMO — fear of missing out — behavior seen from retail investors has yet to be seen.
Bitcoin pro traders recently added to their leveraged longs
The long-to-short net ratio of top traders accounts for other factors that may have solely affected the stablecoin markets. Analysts can better gauge whether whales and arbitrage desks are leaning bullish or bearish by consolidating positions across spot, perpetual and quarterly futures contracts.
At Binance, the long-to-short ratio of top traders now stands at 1.35, up from 1.24 on Feb. 9, indicating that whales and arbitrage desks have increased their leverage longs despite the 14% weekly gains. Meanwhile, top traders at OKX shifted from a 0.46 ratio, favoring shorts, to the current 1.07 long-to-short ratio on Feb. 12. Essentially, investors at OKX were initially betting against a rally above $45,000 but quickly changed their stance to a bullish outlook.
Related: Bitcoin hits $50K for first time since December 2021
Data from professional Bitcoin long-to-short traders suggest confidence after BTC broke above $49,000 on Feb. 12, making it highly positive. While macroeconomic uncertainty and weakness in Chinese real estate markets may pose short-term risks for Bitcoin’s price, they also open the door for investors seeking alternative investments to protect against inflationary pressure.
The sustainable path above $50,000 has occurred in the absence of excessive leverage and FOMO from retail investors. However, the rally also hinges on the continued absorption of inflows by spot Bitcoin ETFs.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
