Bitcoin may face challenges in reaching its all-time high levels soon, as most investors are currently in profit and might consider taking gains, according to Santiment.
In the near term, Bitcoin could experience more sideways movement, with an overvaluation metric now indicating increased profit-taking potential among holders. The Market Value to Realized Value (MVRV) ratio, which assesses whether Bitcoin is overvalued, is currently at +21%. This suggests that the average investor who bought Bitcoin in the last year is in a comfortable profit, as reported by sentiment platform Santiment on Monday.
While not at extreme historical highs, this situation is seen as a ‘mild danger zone,’ heightening the risk of profit-taking, Santiment noted.
Bitcoin experienced a 10% price rally in the nine days leading up to its new high, but analysts from Bitfinex noted in a market report that the rally ‘quickly fizzled out’ due to a lack of macroeconomic catalysts to support the price.
Historically, when Bitcoin hits new all-time highs and begins to consolidate or decline, investors tend to take profits, fearing it has reached a local peak. The Bitfinex analysts further indicated that Bitcoin may face sideways price action in the near term.
‘The market is currently in a consolidation phase, with investors adopting a wait-and-see approach as they evaluate upcoming macro catalysts,’ the analysts stated.”
Source: Mags
One macro catalyst that many market participants are closely monitoring is the US Federal Reserve’s rate cut decision scheduled for September 17, with 83.6% anticipating the long-awaited cut, according to the CME FedWatch Tool.
Many Bitcoin traders, however, do not expect significant upside in the near term. Short positions have been increasing, with approximately $2.2 billion at risk of liquidation if Bitcoin rises back to its all-time high of $124,128, according to CoinGlass.
Despite this, Santiment reports that Bitcoin whales remain optimistic about higher price levels. ‘Bitcoin’s largest holders are not selling into this rally,’ Santiment noted. ‘Wallets holding between 10 and 10,000 BTC have continued to accumulate aggressively, even after the all-time high,’ they added.
Source: cointelegraph Edited by Bernie