Bitcoin Drops Below $50K As On-Chain Data And BTC Market Structure Suggest Profit Taking
Bitcoin (BTC) breached $50,000 on February 12 for the first time since December 2021 after rallying 15% in February.
However, as shown on the daily chart, BTC is currently facing resistance at $50,000, and its price fell by more than 2% on February 13. The US Consumer Price Index reported an annual inflation rate of 3.1%, which was higher than consensus expectations. .
Bitcoin Is ‘Close To Another Transitional Phase'
Bitcoin holders have had a positive start to 2024, but data from blockchain analytics firm Glassnode suggests the market may be entering a transition phase. Long-term BTC holders have withdrawn over 300,000 BTC since November 2023.
Since 2021, Bitcoin has recorded a daily close above $50,200 for only 141 days, representing 2.84% of its trading history. The current price puts most investors in a comfortable position where they can start making profits. In fact, only 13% of the total supply is more than $48,000 in losses. This data set coincides with BTC's recently unused transaction output (UTXO) ratio data.
UTXO refers to a transaction result that is used as an input in a new transaction. The UTXO ratio is defined as the number of transactions in profit or loss comparing its value when a particular UTXO is created or destroyed.
When the UTXO ratio is high, it means that the coins have not moved since they were created during that transaction. After BTC reached $50,000, the UTXO ratio reached 96.62%, indicating that investors are starting to make more profits.
On the other hand, short-term holders (STHs) have been reset. During the spot exchange-traded fund (ETF) rally, STH's gain reached 100%, but BTC's correction to $38,000 reduced the average to 57.5%.
Bitcoin ETF is inbound.
Meanwhile, the Spot Bitcoin ETF saw significant net gains last week. According to Eric Balchunas, senior ETF analyst at Bloomberg, net inflows for the 10 ETFs totaled more than $3 billion. Additional data from the CoinShares report highlighted that total crypto assets under management reached $59 billion, the highest since 2022.
Strong Bitcoin ETF inflows have pushed the Coinbase Premium Index to a premium, indicating increased buying pressure on the exchange.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
