NOIDA (CoinChapter.com) — Bitcoin’s recent price surge has reignited optimism in the crypto market, driven by rising Trump Trade sentiment and hopes of an economic recovery. However, historical data offers a sobering perspective.
Euphoric market conditions often align with sell-offs, as profit-hungry investors begin to exit. Notably, peaks in Short-Term Holder (STH) realized profits have preceded major corrections, with the 2021 crash being a prime example.
Combined with increasing exchange inflows—a signal of potential selling pressure—the current market setup appears fragile. A pullback could force late entrants to panic sell their holdings, plunging Bitcoin and subsequently the crypto market.
Profit-Taking Signals and Macro Volatility Could Spell Doom
The on-chain behavior of Bitcoin’s Short-Term Holders (STH) and Long-Term Holders (LTH) provides valuable clues. Historically, spikes in STH Realized Profit have aligned with market tops. As seen in the LTH/STH chart, large red zones—indicating STH profit-taking—dominated the 2021 peak, leading to an eventual downturn.
Bitcoin relative LTH STH profit realized profit/loss to exchange.
Currently, similar signals are emerging, albeit in smaller bursts. Short-term holders appear to be cashing in on gains as Bitcoin hovers near $80,000. If this behavior intensifies, it could signal the beginning of another corrective phase, especially when coupled with external market shocks.
The Exchange Net Position Change chart adds further weight to this concern. Inflows to exchanges (red) have historically coincided with market tops, signaling intent to sell. The massive spikes in inflows during early 2022 and 2023 led to significant price declines.
Bitcoin Exchange net position change. Source: Glassnode
Recent data reveals a steady increase in exchange inflows, suggesting potential profit-taking and growing market fragility.
Adding to the mix is the Trump Trade effect. While Trump’s electoral optimism has fueled risk-on behavior, macroeconomic fundamentals remain shaky.
Any signs of a recession or stock market correction could trigger a sell-off in Bitcoin, as crypto markets often follow broader risk-off moves. The combination of on-chain profit-taking signals and macroeconomic volatility places Bitcoin on the edge of a potential tipping point.
Moreover, Fears of a 2025 recession stem from rising U.S. debt levels, tighter monetary policies, and weakening global growth. Analysts warn that persistent inflation and delayed rate cuts could trigger a stock market correction, forcing investors into risk-off assets.
Historically, such conditions have caused Bitcoin sell-offs amid broader market panic.
Bitcoin Targeting $110,000, But…
Meanwhile, the BTC USD pair continued its uptrend, rising to a new ATH near $107,500 on Dec. 17 before the rally calmed down slightly. The prime crypto is likely benefitting from the new year euphoria influencing the market.
However, a correction here could send the token tumbing to the support level near $95,200. Moreover, the relative strength index for Bitcoin has broken into the overbought region, scoring 70.97 on the daily chart.
BTCUSD daily price chart with RSI. Source: Tradingview
Overbought RSI levels usually herald an upcoming reversal, which could scare away some buyers from the market. Breaching the immediate support level could force Bitcoin price to test the 100-day EMA (blue) as support near $81,630.
On the other hand, a continued rally, fueled by the upcoming holidays euphoria and market hype could see the BTC USD pair challenge the resistance near $117,000. Breaking and consolidating above the immediate resistance might help Bitcoin rise to $133,000, maybe sometime in late Jan. 2025.
