Bitcoin was trading at $68,388 at press time after rising 9% in just seven days. On October 18, Bitcoin hit a two-month high above $68,900, reinforcing market optimism about further gains.
Several factors combined could support Bitcoin's rally to an ATH, including market prices following the US election results and inflows into spot Bitcoin exchange-traded funds (ETFs).
However, short-term holders remain key to when Bitcoin will reach its record high. Consider this – After Bitcoin surged to a two-month high, on-chain metrics show that this group started selling.
Analysis of short-term holder behavior
Data from CryptoQuant shows an increase in Bitcoin exchange inflows from traders holding Bitcoin for between one and three months. Exchange inflows The output age range spent by this group increased to a weekly high as BTC hit $69,000 on the chart.
This spike could be seen as a sign of profit-taking as short-term traders look to take advantage of favorable market conditions. The short-term holders’ profit-output ratio further highlights that these traders have been selling BTC to make a profit. Especially since the metric has been above 1 for over a week now.
While a SOPR ratio above 1 indicates that the overall market sentiment is positive, it can also mean that there is a high probability of profit-taking. If Bitcoin's uptrend shows signs of weakening, this group will likely start selling more, causing a price reversal.
Besides short-term holders, another group that could delay Bitcoin's ATH is the 1.9 million addresses that bought BTC between $66,900 and $69,200. According to IntoTheBlock, these addresses were at break-even at press time.
Bitcoin will certainly face resistance as it approaches $69,000 as these addresses may start selling as profits come in.
However, short-term holding behavior is unlikely to dampen market sentiment around Bitcoin, especially since it is currently only 7% short of its ATH.
Technical indicators show bullish signs
Bitcoin's daily chart shows strong bullish momentum, at the time of writing. The Relative Strength Index (RSI) is at 68, indicating strong buying pressure. The RSI has also hit a higher high, suggesting that the uptrend may be strengthening.
On-balance volume is also increasing and trending above the smoothing line. This seems to reinforce bullish sentiment as it shows that capital has been flowing into Bitcoin. This could increase buying activity and stir profits.
If these bullish signs continue and Bitcoin breaks above $69,000, the next resistance level will be at $75,250, at which point Bitcoin will form a new ATH. Conversely, if profit-taking continues, the asset is likely to drop to test support at the 0.618 Fibonacci level ($65,130).
In fact, some traders were anticipating such a drop. For example – Data from Coinglass shows that 60% of open positions were short sellers betting on an unsuccessful uptrend.
