Most long-term Bitcoin holders are currently making a killing, which has led to an increase in the likelihood of profit-taking, and the price of Bitcoin has fallen as a result. In fact, this is not uncommon. After all, when everyone is making money, someone will always start to think about taking out the profits. This is also part of how the market works, and there is nothing surprising about it.
Bitcoin price has staged a surprising rebound this week, gaining as much as 18.50%, and there seems to be a glimmer of hope for the market after falling to a low of $49,755. However, experts point out that the combined influence of technical and on-chain indicators may cause the cryptocurrency to continue to pull back in the coming weeks.
Over 80% of long-term Bitcoin traders are still profitable
BTC’s ongoing correction cycle is accompanied by a decline in the percentage of long-term holders taking profits (calculated on a 30-day moving average).
As of August 16, nearly 83% of these mature Bitcoin holders (those who have held the cryptocurrency for more than 155 days) were in profit. In March, the percentage of profitable long-term investors was about 96%.
The recent increase in BTC profit holdings is often seen as a sign of "FOMO" (fear of missing out). This phenomenon usually precedes or coincides with price corrections. If long-term holders (LTH) decide to take profits, the price of Bitcoin may see a correction in the coming days.
Ascending triangle breakout could push BTC price to $50,000
Bitcoin is currently in a period of consolidation and appears to be forming an ascending triangle pattern. This pattern usually appears after a strong downtrend and technically indicates that the downward momentum may be reversing or weakening.
However, there is also a possibility that the ascending triangle acts as a continuation pattern of the downtrend. If the price fails to break out of the resistance and instead breaks below the uptrend line, the downtrend is likely to resume, which means that the sellers are back in control.
The risk to the downside is if Bitcoin stays below the current resistance, which coincides with the 50-4H exponential moving average (50-4H EMA; red wave), around $59,280. A decisive decline below the lower trendline of the triangle could trigger a breakout setup.
If this happens, the price of Bitcoin could fall to around $50,000, which is also a psychological support level. The downside target of the ascending triangle is here. This price point is a key support level for investors holding Bitcoin because if the price falls below this point, it may trigger more investor selling.
Bitcoin May Not Collapse
As mentioned above, the ascending triangle is considered a bullish reversal pattern within a downtrend. Therefore, Bitcoin’s decisive close above the 50-4H EMA could increase the likelihood of a rally to the triangle’s upper trendline, which coincides with the 200-4H EMA (blue wave), around $59,240.
Meanwhile, a successful breakout of the upper trendline could trigger an ascending triangle breakout to around $70,000.
This bullish sentiment is consistent with the view put forward by Charles Edwards, founder of digital asset fund Capriole Investments.
Edwards believes that the price of Bitcoin lags behind its safe-haven rival, gold. He superimposed a chart of Bitcoin on a chart of gold and found that Bitcoin's trend lagged behind gold by three months. Gold has broken out of its previous consolidation trend and may prompt Bitcoin to do the same.
“As a rule of thumb, bitcoin’s macro trends tend to lag gold by several months,” Edwards said, adding that the cryptocurrency’s upside prospects “look promising.”
The Federal Reserve may cut interest rates! This news has excited Bitcoin investors because it may further boost Bitcoin's upward trend. The Fed's rate cut will reduce the opportunity cost of holding income-generating assets such as US bonds, which will increase investors' interest in riskier assets such as stocks and cryptocurrencies.
For Bitcoin, the Fed's rate cuts portend lower opportunity costs, which means that investors will be more willing to invest in riskier assets, such as Bitcoin. Therefore, this news may further boost Bitcoin's price and create more opportunities for its upward movement.
