Bitcoin sees $5 billion in realized profits – Explained

• Large investors have dominated accumulation, while retail traders scaled back
• Hike in large transactions and participation metrics hinted at mixed signals for Bitcoin’s near-term direction

Bitcoin [BTC] traders celebrated a monumental day after nearly $5 billion in realized profits flooded the market, marking one of the largest profit-taking events in recent months. The surge alluded to a heightened level of market activity, one possibly fueled by renewed investor confidence. 

However, such massive profit realizations can also precede greater volatility or a pullback in the crypto’s price. At press time, Bitcoin was trading at $104,370 following a bout of very minimal depreciation over the last 24 hours. Can Bitcoin sustain its rally, or is a pullback inevitable?

Large investors vs retail – Who’s driving the market?

Large investors have notably increased their Bitcoin holdings from 16.2M BTC to 16.4M BTC since the U.S Presidential elections. The scale of such accumulation highlighted the growing dominance of institutional players across the market. 

On the other hand, retail investors have reduced their holdings from 1.75M BTC to 1.69M BTC – Possibly signaling caution amid recent volatility. Therefore, it’s clear that large investors are setting the pace, potentially driving BTC’s price momentum forward. However, the fall in retail participation could limit additional upward pressure.

Source: CryptoQuant

Surge in transactions – What does it mean?

The number of BTC transactions exceeding $100,000 has doubled in just one week, climbing from 15,620 to 32,320. Such a dramatic hike is a sign of heightened market activity, one suggesting that institutional players or high-net-worth investors are actively trading. 

Furthermore, the 7-day transaction high of 30,320 hinted at growing confidence in the cryptocurrency’s utility for large-value transfers. However, whether these readings reflect long-term optimism or short-term speculation remains unclear right now. 

Source: X/Ali

Bitcoin’s price action and resistance levels

The crypto’s price charts pictured consolidation around $104,000, with clear support at $92,210 and resistance at $106,143. Profit-taking of nearly $5 billion in a single day suggested that sellers have been beginning to dominate short-term moves. 

However, the RSI of 60.82 indicated neutral momentum, leaving room for either bullish or bearish outcomes. Additionally, BTC’s inability to break above the $106,000 resistance highlighted that buyers may need stronger catalysts to maintain momentum.

Source: TradingView

Participation ratio – What does it mean for BTC?

The participation ratio metric shed light on Bitcoin’s market activity.

High positive ratios seemed to point to active new participants entering the market, driving liquidity and momentum. Conversely, negative ratios highlight the exit of participants, which can create resistance.

Therefore, understanding these metrics can help identify critical levels of support and resistance – Such as the $104,000-$106,000 range. 

Source: X/Hyblock

Read about Bitcoin’s price prediction for 2024

Bitcoin’s price trajectory hinges on the balance between large investor accumulation and retail caution.

Although market indicators seemed to hint at room for growth, the resistance at $106,000 has been looming large. Therefore, Bitcoin’s immediate future will likely depend on whether it can attract enough momentum to overcome this critical level.