BTC Price Surge Slows as Short-Term Investors Cash in $11B Profits

Bitcoin saw a slight recovery over the weekend, but on Monday, it dropped back to $109,000 with trading activity slowing down as the traditional U.S. markets were closed for Memorial Day.

Despite this dip, the leading cryptocurrency remains up 1.7% in the past 24 hours, just shy of the record high achieved the previous week.

According to the CoinDesk 20 index, which tracks the top 20 cryptocurrencies by market cap (excluding stablecoins, memecoins, and exchange tokens), Uniswap’s token emerged as the day’s standout, climbing by 6.6%. Chainlink and Avalanche also saw gains, with increases of 3.3% and 3.4%, respectively.

These upward trends occurred overnight, influenced by a shift in the Trump administration’s stance on EU tariffs. On Sunday, he announced a delay on implementing a 50% tariff on European goods, originally set to take effect on June 1, which had previously triggered a sell-off in various risk assets, including cryptocurrencies. As a result, European stocks rebounded following this news.

Profit-taking by short-term holders accelerates

While the cryptocurrency market has partially recovered from the losses sustained over the weekend, analysts from Bitfinex indicate that Bitcoin may be entering a volatile phase as traders assess the rapid rise of nearly 50% from April’s lows.

Short-term holders are increasingly taking profits, which could limit Bitcoin’s short-term gains: this group has realized $11.4 billion in profits over the past month, compared to just $1.2 billion in the previous 30 days, as noted in the report.

The analysts remarked, “At these levels, the risk arises that profit-taking could exceed the influx of new demand.” They further cautioned, “If there isn’t a significant influx of new capital to absorb this selling pressure, prices may face stagnation or potential declines.

The next few days will be crucial in determining whether the dip to $106,000 has established the lower boundary of the trading range, or if a more significant correction might be forthcoming. If a larger pullback occurs, the critical level to observe will be the average purchase price around $95,000 for short-term holders, which represents the cost basis for this group of investors.

There has been a significant influx into U.S. spot bitcoin ETFs, amounting to $5.3 billion for May thus far. Combined with low volatility and the absence of market exuberance, analysts suggest that Bitcoin could likely resume its upward momentum as the third quarter approaches after a brief pause.

Read more: Bitcoin Regains $110K After Weekend Sell-Off; ADA, DOGE Lead Uptick in Crypto Majors