Bitcoin correction is tied to profit-taking by long-term holders, says Bitfinex analysts
Although a correction is underway, the movement is seen as healthy, and the chief of markets at YouHodler still considers a jump to $80,000 this year.
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Bitcoin (BTC) fell over 7% since April 1, tumbling down from $70,877.82 to the current price of $65,619.10. Bitfinex’s analysts point out that this correction reflects a healthy market adjustment following BTC’s surge to new all-time highs, and it’s related to a profit-taking movement.
“We believe that Bitcoin is likely to continue to consolidate within a range, as previously dormant supply, particularly among Long-Term Holders (LTHs), is being sold (although at a relatively smaller scale than previous bull market tops). The BTC price has continued to appreciate this year, as was seen in 2023, but volatility has increased considerably. One of the factors causing this is strategic profit-taking observed among the LTH cohort (holders of BTC of more than 155 days),” the analysts added in a commentary sent to Crypto Briefing.
Moreover, this is a common movement registered in previous cycles, when the old supply of LTH is activated after a new all-time high. The analysts at Bitfinex consider this as a testament to the cyclical nature of the market and reflects patterns of distribution and accumulation that underscore investor sentiment and market psychology.
“We are seeing this particularly when BTC navigates above the $70,000 mark […] As over $2.6 billion in profits has been recorded through on-chain transactions, with a significant portion attributed to Long-Term Holders, we anticipate continued fluctuations as the market absorbs this newfound supply,” the analysts weigh in.
However, the stock market might affect the Bitcoin price, according to Ruslan Lienkha, chief of markets at crypto services provider YouHodler, as a possible correction in traditional markets can trigger institutional capital outflows from crypto due to investment companies’ formal approach based on asset credit ratings. Nevertheless, Lienkha still sees BTC reaching $80,000 this year, although not without more significant corrections.
“We may see an upward trend all the way through the halving, and then there may be profit fixation. As a consequence, some limited price correction may happen,” YouHodler’s chief of markets concludes.
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