See Bitcoin Stock Addresses Registering Revenues as a Correction Risk: CryptoQuant

Following Bitcoin (BTC)'s all-time high of $69,000 and a subsequent rebound, Bitcoin stocks are confirming a record entry.

According to a weekly report published by CryptoQuant, the amount of daily deposits into Bitcoin storage addresses has risen to 38,000 BTC, bringing the total holdings of wallets to a record high of 1.5 million BTC.

Deposit addresses see high income

Bitcoin storage addresses only receive BTC and never sell it. CryptoQuant said that the increase in their holdings of digital assets indicates strong demand.

The increase in holdings of Bitcoin stock addresses correlates with strong demand for spot Bitcoin Exchange Traded Funds (ETFs), which has remained consistent over time. With the exception of GBTC, all ETFs had accumulated around 360,000 BTC at the time of writing, representing 1.8% of the asset's total supply.

According to analysts, the crypto market may be at the beginning of a cycle where new investors are buying at higher prices than older ones. This development can be seen in the decrease of 70.5% recorded in November 2023 in 68% of the supply of Bitcoin, which has not moved for more than a year.

BTC correction risk

As storage addresses and ETFs saw record earnings, CryptoQuant reiterated the risk of a short-term price correction as the price of BTC rose too quickly against key chain indices. A bull-bear market cycle indicator is a platform indicator when BTC rises above $65,000.

Additionally, Bitcoin miners are currently extremely overvalued as seen in the mining profit/loss sustainability metric. As of December 2023, mining revenue is increasing due to the increase in BTC price.

Short-term investors' unrealized profit margin is currently at a premium, hovering at 57 percent, up from 32 percent last week. Analysts expect pressure from these traders to sell soon as a 40% profit margin suggests a price adjustment. When this indicator drops below the 30-day moving average, it may also signal a price correction.

Moreover, some short-term investors have started selling their assets to make some profit. According to CryptoQuant's analysis, this group of market participants has been exiting their holdings in the past few days at the highest profit margins not seen since February 2021, averaging 11 percent. This move could also put significant selling pressure on the crypto market.