Ongoing Profit-Taking Could Slow Bitcoin’s Move To Record High

As a seasoned researcher with a knack for deciphering market trends, I’ve seen my fair share of bull runs and corrections. The current surge in Bitcoin (BTC) has piqued my interest, especially given its 12% rise this week and the DXY index breaching the 103 mark. This isn’t the first time we’ve seen these numbers – remember the Yen carry trade unwind back on Aug. 5? Bitcoin plunged to $49,000 then, but this time around, it seems resilient, even as the DXY continues its climb.

This week, the top digital asset, Bitcoin (BTC), has experienced a 12% increase, potentially indicating that new record highs may be reached within the upcoming weeks.

Progress toward record-breaking levels could be gradual, given the tendency for profit-taking. This is supported by data from Glassnode, which indicates that about 5% of all Bitcoin in circulation is currently experiencing a loss, while an estimated 95% is profitable.

In simpler terms, “the latter” refers to a situation where successful investors might choose to sell their cryptocurrencies, even in a growing market, due to the need to cash out profits.

Historically, when the proportion of bitcoins in profit surpasses 94%, there’s usually a rise in selling activity which causes Bitcoin’s price to drop or correct.

Long-term holders (LTH), defined by Glassnode as those holding coins or at least 155 days, could be the one taking profits, living up to their reputation of being smart traders or those that buy when prices are depressed and sell into a rising market. As of writing, LTHs hold only 500,000 BTC at a loss, which is a small fraction, considering they hold 14 million BTC as a cohort.

Currently, short-term investors hold approximately 235,000 Bitcoin that are showing a loss, which is the least since March, a period when Bitcoin reached its all-time high price.

Profit-taking has begun

Realized profit has increased over the past week, signaling profit taking from some investors.

According to Glassnode’s data, approximately $11 billion worth of profit was realized over more than a week, and $5.6 billion was made on October 8th alone – marking the largest one-day profit-taking event since May 28th.

Strong momentum

Two key indicators demonstrate the genuine power behind this rally: Bitcoin‘s dominance has reached unprecedented levels for this cycle, almost touching 60%, a figure not seen since April 2021.

Moreover, Bitcoin appears robust despite the escalation of the DXY index surpassing 103.5. Previously, when the DXY index exceeded 103 on August 5, it coincided with the yen carry trade unwind, causing Bitcoin to fall dramatically from $65,000 to $49,000 within a few days.