Bitcoin Faces Potential Sudden Drop as Traders Secure Gains: Bitfinex

In the past week, bitcoin reached a new peak, showcasing a remarkable rebound from the lows experienced back in April. The strength and continuity of this upward movement enabled BTC to achieve its seventh consecutive weekly closing in the green, representing the most extended winning streak since October of the previous year.

Yet, the latest Bitfinex Alpha report suggests that this streak may soon come to an end, as traders are starting to cash out their profits. Additionally, bitcoin could face challenges in maintaining its momentum due to a negative macroeconomic climate exacerbated by trade tensions in the U.S.

Potential for a Pullback

Following the new peak within just 36 hours, BTC encountered a minor downturn, dipping below its previous record of $109,590. This adjustment was linked to renewed concerns over a global trade conflict, particularly stemming from U.S. President Trump’s suggestion of implementing 50% tariffs on imports from the European Union.

As cryptocurrencies navigated the repercussions of Trump’s tariff stance, the bitcoin perpetual futures market experienced a sell-off, leading to an unwinding of excessive leverage. This contributed to additional downward pressure on BTC and heightened the likelihood of a corrective phase in the near future.

It remains to be seen if BTC can stabilize above the weekly lows of $106,000 in the coming days. Profit-taking among short-term holders could prompt a more profound reset before any future upward movement, as investors often decide to secure their earnings during significant price increases.

Profit-Taking Among Short-Term Investors

According to Bitfinex, there are two distinct groups of sellers: those who purchased BTC during its dip and are now in profit, and those who faced losses in the previous downturn and have returned to profitability. Both groups are already locking in gains, as indicated by on-chain analysis.

As BTC surged past $93,400, aligning with the short-term holder cost basis, profit-taking activities intensified. Over the past 30 days, these short-term holders have realized approximately $11.4 billion in profits, peaking at $747 million daily. This contrasts significantly with the $1.2 billion in total profits recorded in the preceding 30-day timeframe.

The increase in profit-taking is also reflected in the STH Realized Profit/Loss Ratio, which has reached levels seen on merely 8% of trading days throughout Bitcoin’s history.

“This rapid change underscores how quickly investor emotions and actions can shift when momentum returns. However, it suggests that some level of consolidation may be necessary as the market processes this distribution wave before attempting to climb higher again,” noted analysts from Bitfinex.