In the short term, Bitcoin prices are unlikely to experience sharp declines like the 10% drop last week, as selling pressure has significantly eased after Bitcoin's initial surge past six figures, according to a cryptocurrency analyst—although there are still skeptical opinions.
"With the sharp drop in unrealized profits and selling pressure, we can expect future declines to be less sudden than the drop last week," analysts from Bitfinex noted in their market report on December 9.
Signals indicate that selling pressure has eased.
On December 6, within 24 hours, Bitcoin (BTC) dropped nearly 10% from $103,493 to below $93,000, just one day after surpassing the $100,000 threshold for the first time on December 5, according to data from CoinMarketCap.
Bitcoin price volatility over the past seven days | Source: CoinMarketCap
Bitcoin Magazine reported that the sudden price drop from $98,338 to $92,957 caused over $303.5 million in Long positions to be liquidated within an hour, bringing the total liquidations in 24 hours to $404 million.
However, Bitfinex analysts believe that the market is showing signs of being more stable.
"Unrealized profits (RP), an index tracking profits in USD from coins being moved, peaked at $10.5 billion per day as Bitcoin soared above $100,000. However, this figure has now dropped to about $2.5 billion per day, equivalent to a 76% decrease."
They explained that this indicates that profit-taking activity has "significantly decreased" and upcoming sell-offs may be "less dramatic."
At the time of writing, Bitcoin is trading at $97,183, according to CoinMarketCap.
Analysts at Bitfinex also stated that the funding rate of Bitcoin is stabilizing, suggesting that the market is moving into a more balanced phase, where volatility is likely to be controlled and price fluctuations will be less erratic in the medium term.
Funding APR Heatmap | Source: CoinGlass
The current funding rate of Bitcoin on the world's largest cryptocurrency exchange, Binance, is 0.01%, according to data from CoinGlass.
However, James Check, head of analysis at Glassnode, remains uncertain about the market's stabilization potential.
"The selling pressure from current investors is very high and, in my view, completely outweighs the demand from both ETF funds and MicroStrategy (MSTR)," Check wrote on platform X on December 9.
"There are many signs of stress," he added.
Long-term investors have realized significant profits.
The average entry price of long-term investors—the average price at which they bought Bitcoin—is currently $24,481, corresponding to an average profit of about 400% for these investors.
Bitcoin Magazine recently reported that the surge of Bitcoin to nearly $100,000 has triggered a large number of long-term investors to sell off. Some analysts believe this could signal a potential price peak, which might catch traders off guard as buying demand begins to weaken.
"This is like a game of musical chairs: enjoy the journey, but be ready when the music stops," Maartuun, a contributor to CryptoQuant, commented on December 8.
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