Bitcoin Bulls Face Reality Check as Profit-Taking Frenzy Hits Market

Bitcoin's latest rally triggers a wave of sell-offs—because nothing screams 'long-term conviction' like cashing out at the first sign of green.

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$105,486 holders. This trend coincides with a strong bullish signal indicated by Bitcoin’s price averages. On May 22, Bitcoin’s 50-day simple moving average surpassed the 200-day average, confirming the “golden cross,” a technical signal suggesting a long-term upward trend. During this period, Bitcoin’s price surged to over $111,000, marking a new record high.

ContentsIncrease in Profit-TakingOther Indicators and Economic ActivityMarket Trends and Economic Expectations

Increase in Profit-Taking

On-chain data from Glassnode revealed that investors were keen to sell their assets amid the price surge. Adjusted realized profit surpassed $500 million per hour three times, denoting some of the most intense profit-taking activities seen in the past 24 hours. Adjusted realized profit computes the total profit by tracking blockchain movements, calculating the difference between the sale price and the price at the coin’s last move.

Glassnode’s report emphasized, “The adjusted realized profit exceeded $500 million per hour three times in the past 24 hours, indicating intense profit-taking activity.” Graphs depict the profit-taking trend steadily rising since the second half of May, surpassing the $500 million threshold multiple times. This marks one of the strongest profit-taking phases since early February.

Other Indicators and Economic Activity

Aside from realized profit, the SOPR (Spent Output Profit Ratio) indicator mirrored this trend. SOPR measures the profitability of moved coins within a set time frame. Its adjusted version, excluding intra-wallet transfers, provides a more accurate depiction of genuine economic activity. Glassnode’s weekly report notes, “The recent peak breakout triggered a remarkable rise in profit-taking, with the average coin generating a 16% profit. The ratio of days with investor profits exceeding 8% indicates a substantial transition to profit-taking.”

The report also noted that current profit-taking is not as intense as past major price peaks. Nevertheless, the recent uptick highlights that a significant portion of investors is choosing to sell their Bitcoin holdings to realize gains.

Market Trends and Economic Expectations

Observations suggest that new price peaks and economic indicators are encouraging some investors to cash out profits, yet these sales haven’t led to any severe market pullback. At the time of writing, bitcoin was trading at $105,600. This coincided with news regarding former U.S. President Donald Trump’s social media platform, Truth Social, taking a step closer to offering a Bitcoin ETF to ordinary investors.

Changes in investor behavior indicate market caution despite rising prices. Profit-taking has increased, but sales are not as intense as previous instances. Current economic and political developments might drive short-term volatility in the Bitcoin market as investors react to technical signals and global trends.

Market data suggests Bitcoin investors often act similarly during bullish periods. Following golden crossover and price records, short-term profit-taking increases. Long-term investors reportedly maintain their positions.

Recent developments and investor trends underscore the significance of risk management and the current market level. Investor profit-taking has increased, yet actions are below past peak levels. Market experts advise vigilance against possible future price fluctuations.

Profit-taking following a Bitcoin price surge indicates potential shifts in market dynamics. While investor reactions to technical indicators and market changes guide the market, economic activity indicators highlight that profit-taking intensity is limited compared to the past. Monitoring technical signals and developments is beneficial for investors. Each investor’s approach to profit-taking could influence market price balance mechanisms.

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