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Bitcoin is going through a phase of intense volatility. As its price flirts with historic levels, the question on investors’ minds is: is repeated profit-taking really slowing its development? This is the dilemma the market often faces, between bullish euphoria and profit-taking realism.
Profit taking: a natural mechanism, but a double-edged one
When an asset like Bitcoin is skyrocketing, it’s only natural that many holders want to lock in their profits. This “profit fever” clearly shows that every price increase leads to a wave of sales. But should we consider this an insurmountable obstacle to BTC’s progression? Not necessarily.
Taking profits doesn’t really mean the end of a bull run. They may even indicate a simple breathing phase of the market.
Bitcoin, which has already experienced significant corrections, has often shown its resilience by recovering from periods of massive selling. Long-term holders remain bullish, supported by strong technical indicators.
“The risk that this gradual profit-taking weighs on BTC’s upward momentum should not be underestimated.
When selling pressure combines with major technical resistance, the market may find itself in a stagnant phase, as is currently the case around $63,900.
Do the indicators show shortness of breath or a temporary pause?
Previous cycles show that every bullish period experiences significant profit-taking.
However, these temporary corrections never ended the market momentum. On the contrary, they often served to strengthen the buying base, eliminate weak positions and consolidate the market before the next bull run.
Analysts such as Axel Adler warn that Bitcoin may not have peaked yet. The LTH/STH SOPR ratio, a key indicator of profit-taking behavior, shows that the dynamics of previous cycles have not yet been repeated.
Long-term holders, usually the most cautious, have yet to liquidate their positions massively, suggesting that the uptrend could continue.
But beware, every cycle is unique. The recent approval of a spot Bitcoin ETF and the momentum surrounding the BTC halving in 2024 could affect the very nature of the market this time around.
This means that even if there is a one-time profit taking, it may not have the usual effect of suddenly curtailing Bitcoin’s progress.
$63,900 resistance: a line to watch
Bitcoin’s recent moves show some difficulty in breaking the $63,900 mark. This level is key because it represents the 200-day moving average, a technical indicator that is often crucial for institutional investors.
Until this resistance is broken and turned into support, it is difficult to foresee further sustained bullish momentum.
However, if Bitcoin manages to break through this key zone, the potential for further momentum towards all-time highs is again possible. Whales, those big holders of BTC, continue to take profits, but as long as the majority of buyers remain confident, BTC can withstand this selling pressure.
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Fascinated by Bitcoin since 2017, Evariste continued to research the topic. If his first interest was trading, now he is actively trying to understand all the developments focused on cryptocurrencies. As an editor, he strives to consistently deliver high-quality work that reflects the state of the industry as a whole.
DISCLAIMER OF LIABILITY
The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.