As the cryptocurrency market continues to navigate its latest ups and downs, Bitcoin (BTC) has recently dropped below $105,000 after reaching an all-time high of $108,365 on December 17. The short-term drop occurred ahead of the United States Federal Reserve’s interest rate announcement on December 18, which had been anticipated to be a 25-basis-point cut.
Short-Term Volatility vs. Long-Term Gains
Despite the recent volatility, one crypto analyst has highlighted a bullish scenario taking shape, with long-term BTC holders positioning themselves for future gains. This development is particularly noteworthy in light of Bitcoin’s surprising return of 37% in November 2024, which was followed by a profit-taking frenzy.
Profit-Taking Frenzy: A Closer Look
As Cointelegraph reported earlier, selling pressure reached 366,000 BTC per month in November, estimated to be around $10 billion. However, according to Percival, a verified Bitcoin analyst on CryptoQuant, the magnitude of profit-taking has significantly cooled down over the past three weeks.
Declining Profit-Taking: A Sign of Future Gains?
As illustrated in the chart below, the profit realized by long-term holders dropped from $10 billion on November 25 to $3 billion on December 14, despite a 12% increase in BTC prices during that time period.
| Date | Profit Realized (LTH) |
| — | — |
| Nov 25 | $10 billion |
| Dec 14 | $3 billion |
This significant decline in profit-taking is a crucial indicator of the market’s sentiment. According to Percival, "This means that LTH has realized most of its profits at this stage and is ready to see further increases."
Market vs. Realized Price Gradient Oscillator Chart
To further analyze the market’s sentiment, Percival used a 90-day market vs. realized price gradient oscillator chart. The index is currently in an equilibrium zone of 0.5, which indicates a neutral position between buyers and sellers.
| Date | Market vs. Realized Price Gradient |
| — | — |
| Dec 14 | 0.5 (Neutral) |
A strong balance between the two sides demonstrates the potential for an "upward phase," as the crypto asset is neither overbought nor oversold.
Coinbase Premium: A Warning Sign?
Despite the positive development of decreased profit-taking and a neutral trend, it’s essential to note that the Coinbase premium has been falling since the beginning of December. Yonsei Dent, a pseudonymous crypto trader, highlighted that over the past two weeks, the premium has been on a "notable decline" with respect to BTC prices.
| Date | Coinbase Premium |
| — | — |
| Dec 1 | 12% |
| Dec 14 | 6% |
The inverse correlation suggests that BTC’s rally was not supported by demand from US investors. The analyst added, "It could indicate underlying weakness in medium-term upward momentum. Investors should remain cautious and monitor this development closely."
Bitcoin’s Market Structure: Choppy but Promising
Regardless of the market’s choppy structure, Daan Crypto, an independent crypto trader, believes that Bitcoin has followed last year’s price action. The trader expects the price to chop further as 2024 wraps up before an "actual breakout" in Q1 2025.
Conclusion: A Bullish Scenario Takes Shape
In conclusion, despite short-term volatility, a bullish scenario is taking shape for Bitcoin. Long-term holders have realized most of their profits and are positioning themselves for future gains. The market’s sentiment is also indicating a potential upward phase, as the crypto asset is neither overbought nor oversold.
However, it’s essential to note that the Coinbase premium has been falling, which may indicate underlying weakness in medium-term upward momentum. Investors should remain cautious and monitor this development closely.
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This article is for general information purposes only and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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