Bitcoin’s intense uptrend throughout the past week led its price to highs of $11,400 before it lost some momentum and declined slightly.
This latest uptrend has made it so that BTC is less than 45% below its all-time highs.
It now appears that the benchmark cryptocurrency is poised to see some further upside, as its technical strength has been mounting as it consolidates above $11,000.
There is one set of on-chain data that seems to spell trouble for Bitcoin.
Currently, 93% of the circulating token supply is profitable. Historically, when this percentage is hit, the cryptocurrency forms a mid-term top that results in notable downside.
Of course, there have been times throughout history – like 2017 – in which this number remained above this level for an extended period, but it is one factor to consider while analyzing the cryptocurrency’s short-term outlook.
Bitcoin’s Latest Upswing Brings It Closer to Reaching 2017 Highs
At the time of writing, Bitcoin is trading up over 2% at its current price of $11,170. This marks a notable surge from recent lows of $10,500 that were set yesterday when bulls attempted to invalidate its uptrend.
The strong defense of this level, however, quickly allowed BTC to rebound back into the $11,000 region.
The confirmation of the support-resistance flip also further bolstered the cryptocurrency’s mid-term outlook, as it shows that this movement is more than a fleeting bull trap.
Bitcoin is now trading beneath a dense resistance region between $11,200 and $11,400, and analysts are widely noting that a break above this area could be enough to send it surging significantly higher.
Currently, BTC is trading just under 45% below its previously established all-time highs of $20,000. Each leg higher brings it that much closer to reaching this historic level.
“Less than halfway from the previous top: Bitcoin’s price drawdown from ATH is currently at -44.1%,” research firm Glassnode explained in a recent tweet.
Image Courtesy of Glassnode.
BTC Profitability a Warning Sign Regarding Strength of Ongoing Uptrend
Because the vast majority of the circulating Bitcoin supply was purchased beneath its current price levels, nearly 93% is currently sitting in a state of profit.
Data from Glassnode reveals that the cryptocurrency typically forms a mid-term high once the percent supply in profit hits this level.
“BTC’s break above $11,000 has lead to a sharp increase in the on-chain supply in profit. Currently almost 93% of the circulating Bitcoin supply is in a state of profit – the highest level in over a year.”
Image Courtesy of Glassnode.
This does indicate that the cryptocurrency may soon start struggling to maintain its strong momentum.
Featured image from Unsplash. Pricing data via TradingView.
by Cole Petersen on July 30, 2020 at 04:30AM
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