Bitcoin has been a wild ride for investors lately, with the world’s most valuable cryptocurrency breaking through the $29,000 mark, only to be swiftly rejected. However, on-chain data is now revealing a concerning outlook for the future of Bitcoin.
It seems that some traders and whales are cashing in following weeks of gains, which has sparked fears of an imminent decline. This development has left many investors concerned, wondering whether this is just a temporary pullback or the start of a larger correction.
CoinMarketCap shows the current price of Bitcoin (BTC) is $27,779.40, down 3.6% in the last 24 hours. Despite the recent dip, Bitcoin’s 14-day increase is 10.1%, and the 30-day rally is 19.6%. This shows that Bitcoin’s overall trend is still bullish, but the recent pullback has some investors concerned.
On-Chain Data Suggests Bitcoin Traders And Whales Are Selling
In the past week, CryptoQuant’s Spent Output Profit Ratio data has surged above 1, indicating that certain traders and whales are cashing out after a period of steady gains. This can be seen in the rising count of hefty transactions that are transferring Bitcoin from exchanges to private wallets.
This indicates that some investors are taking their profits and transferring their digital assets to cold storage or off-exchange wallets.
#Bitcoin – What a lovely fakeout. This is why you don’t chase green candles pic.twitter.com/oJzrMoRi20
— IncomeSharks (@IncomeSharks) March 30, 2023
$29,000 Breach A ‘Fakeout’
Bitcoin made a brief foray into the $29,000 territory on Thursday, only to experience what market participants have labeled a “fakeout.” This term is often used in the world of technical analysis to describe a false breakout – where Bitcoin’s price breaches a key level – only to swiftly retreat below it.
Essentially, the fleeting incursion past the mark was an indication that the rally was not yet sustainable.
While this may have disappointed some investors who were hoping for a sustained move above $29,000, it is important to remember that Bitcoin is a highly volatile asset. It is not uncommon for the price to experience sharp pullbacks after extended periods of gains.
BTC total market cap currently at $539 billion on the daily chart at TradingView.com
The yellow dotted line indicates the beginning of 2023. Note the volume – the past 5 days are the weakest this year. Last time similar was observed in June 2022. Paradoxically, just before the drop from 30k. pic.twitter.com/JKtEpYhP6G
— Lukasz Wydra (@lukasz_wydra) March 30, 2023
Adding to the air of caution, Lukasz Wydra, a prominent Bitcoin and crypto analyst, on Twitter highlighted that the current trading volumes are at their lowest for the year 2023. This is an ominous similarity to what occurred in June 2022, when a similar lull preceded the drop from $30,000.
His message is clear: with the current state of affairs, investors should keep their wits about them and keep a close eye on market developments.
-Featured image from Virtualization Review