More than 94% of Bitcoin (BTC) holders are profiting as BTC recently rose past its 2021 all-time high of $69,000. But will this trigger profit taking at this key price level in the near term?
94% of all BTC returned as profit.
According to data from market intelligence firm CryptoQuant, analyzed by independent analyst Axel Adler Jr, 94% of BTC supply is currently in profit, with “the majority of coins being purchased around the $55,000 level.”
Bitcoin percent supply return. Source: Axel Adler Jr.
“Short-term holders in particular have been rewarded for buying chop solidation dips in recent months,” Checkonchain analyst Checkmate said of BTC’s rising profitability, noting that most STHs are now “cashing out most of their holdings.” “I received it,” he added.
“This reinforces buy-the-dip behavior and is a sentiment tailwind.”
Supply profit/loss ratio for short-term Bitcoin holders. Source: Checkmate
History shows that high supply of Bitcoin for profit is usually a precursor to a significant price decline and suggests profit taking at higher levels.
When the indicator reached this level in late September, Bitcoin plunged 8.7% from $65,800 on September 28 to below $60,000 on October 3 as investors and traders booked short-term profits.
A similar scenario occurred in March 2024, when capital inflows into US-based spot Bitcoin ETFs and expectations of a Bitcoin halving event in 2024 pushed the price above $73,800 to a new all-time high. This was followed by a 23% decline in BTC price from $73,835 to $56,500 on May 1.
Bitcoin price has also behaved the same way during past bull cycles, when high levels of Bitcoin supply preceded bear market cycles following the 2017 and 2021 bull markets.
Bitcoin price faces significant resistance at $69,000.
Despite the recent bullish price recovery, Bitcoin was rejected at $69,000.
“$BTC is currently facing resistance in key liquidity zones,” Japanese trader Jusko Trader wrote in a post to X on October 22.
Traders cited a supply zone between $67,300 and $69,400, which has proven to be a solid barrier over the past six months.
At the time of publication, Bitcoin was trading below this area at $67,200, but Jusko Trader believes the recent decline was a “healthy” pullback and BTC’s bullish momentum still remains.
“BTC’s bullish momentum goes beyond that. These minor corrections help with big drawdowns because they bring in more/new cash flow.”
BTC/USD daily chart. source: Jusco Trader
If Bitcoin rises above $68,000, approximately $1.65 billion worth of accumulated leveraged short positions will be liquidated on all exchanges.
Bitcoin exchange liquidation map. Source: Coinglass
However, Bitcoin could see inflows into US spot Bitcoin exchange-traded funds (ETFs) over the next few days, helping it breach that level.
Inflows into US spot BTC ETFs have been gaining momentum since October 11, with cumulative inflows reaching $21.2 billion on October 22, according to data from Farside Investors.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.