Why Has Bitcoin’s Price Rally Stopped? (CryptoQuant)

Last week, Bitcoin (BTC) crossed $44,000 but hit a major resistance level near $45,000.

According to a report by an analyst at market analysis platform CryptoQuant, profit taking by a certain group of investors may have caused the price of BTC to pull back.

BTC short term recovery

CryptoQuant's analyst Yonsei's analysis of on-chain data showed that when BTC price broke the $40,000 resistance, a group of short-term holders and 6-18 month investors moved to realize profits.

Profit-taking measures are evident in Bitcoin Binary Coin Days Destroyed (CDD), a metric that measures the weight of long-unused coins by calculating the cumulative value of the number of days between when the asset was owned. He created and spent.

The increase in binary CDD indicates that there is a large supply of BTC or that it has been stored for a relatively long time. Yonsei confirmed that the binary CDD was also active during BTC's rally in early December, indicating recent activity by short-term holders.

The movement to take profit is confirmed by the fact that most BTC holders are in profit. Bitcoin's cost output profit ratio has remained above one, indicating that approximately 90% of holders are profitable.

Taking profits from mining and whaling

While short-term holders sold BTC at huge profits, a group of long-term holders with six-month bitcoins unloaded theirs shortly before the cryptocurrency's price dropped below $44,000. On the other hand, long-term owners remained firm in their positions, refusing to sell their assets and anticipating higher price levels.

In its last weekly report, CryptoQuant noted the crypto market's selling pressure from Bitcoin miners and whales. Last week's high miner flow levels saw BTC rise to $44,000 with an average profit margin of 40%, as miners sold more assets.

Although the bear market is now over and liquidity in the crypto market is improving, Bitcoin is still hovering around $41,000, down 6% from its recent high of $44,180. According to data from CoinMarketCap, the leading digital asset has fallen 1% in the past 24 hours and was trading at $41,300 at the time of writing.