Cryptocurrency Bitcoin Nears "Euphoria" Level as 85% of Holdings Show a Profit
Bitcoin's Profitable Upward Swing
Despite the rocky roads and stubborn headwinds, Bitcoin's profitability continues to sprint ahead, with an astonishing 85% of its circulating supply now in the black. This bullish signal, however, comes with a twist, as the market might be skating on thin ice, ready to stumble into a sudden pullback.
In a recent analysis, the enigmatic CryptoQuant analyst – Darkfost – reported that over 85% of Bitcoin's coin hoard is currently profit-laden. Sure, this trend paints a bright picture, but it's also a double-edged sword since it often ushers in the euphoric phase of market cycles.
Euphoric phases unleash a frenzy of excitement, fueled by increasing investor confidence and a flood of capital into the asset. However, when the supply in profit levels jump to or exceed the 90% mark, it spells trouble. These levels, while indulgent, have historically coincided with local market tops and subsequent correction phases, usually short to medium-term in nature.
Darkfost warns, "Euphoric phases can be brief and tend to be followed by short- to medium-term corrections."
Navigating the Neutral Tide
Interestingly, Bitcoin's funding rate is hovering around 0%, suggesting a eerily calm and anticipatory market. In the futures world, a 0% funding rate implies a balanced market sentiment, where neither the long nor short positions hold the reins.
This stalemate indicates that Bitcoin investors are waiting for a decisive catalyst to steer the market towards a clear direction. Combined with the soaring profit supply, this anticipation sets the stage for potential volatility in the near future.
Bitcoin Basks in Resistance's Glare
Currently, Bitcoin trades at $95,125, snuggling below a robust resistance level of $95,971. Despite the currency's tempestuous dance, demand among traders in the spot market remains robust, as concluded by theasset's Relative Strength Index (RSI), which stands at 68.21.
The RSI measures an asset's overbought and oversold conditions, ranging between 0 and 100. Readings above 70 hint at overbought conditions, teasing a potential price fall. Conversely, values below 30 suggest an oversold market, potentially indicating a rebound.
BTC's RSI positioning suggests that there's room for additional growth before it becomes overbought. If demand surges, Bitcoin could shatter the resistance at $95,971 and surge to $98,983.
However, if bears start to sharpen their claws, Bitcoin could continue its descent and slump to $91,851.
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Enrichment Insights: When Bitcoin's supply in profit surpasses 85%, it signals a robust, bullish market where many investors find themselves on the winning side. Yet, reaching or breaching the euphoria zone (above 90% or even 95%) doesn't guarantee an uninterrupted climb to the top. Instead, it can suggest a potential spike in profit-taking events, fueling price volatility as investors cash out their gains. Over time, this volatility may lead to short to medium-term corrections.
- The cryptocurrency Bitcoin's profitability is soaring, with 85% of its supply currently profitable.
- However, the market might be precarious, ready for a sudden pullback due to the high percentage of profitable Bitcoin.
- Analyzer Darkfost warns that euphoric phases often lead to short- to medium-term corrections.
- Bitcoin's funding rate is neutral right now, indicating an anticipatory market waiting for a catalyst.
- Bitcoin's RSI suggests room for additional growth, with the currency trading at $95,125 under a resistance level of $95,971.
- If demand surges, Bitcoin could potentially break the resistance and surge to $98,983.
- But, if bears start to emerge, Bitcoin could continue its descent and drop to $91,851, highlighting the volatile nature of the cryptocurrency market.
