Bitcoin woke up on the wrong side of the block today.
Its price tumbled over 4% in the last 24 hours, landing at a humble $97,000 as of Dec. 10. For context, that’s 6.4% below its new ew all-time high of $103,650 set just five days ago.
Bitcoin's recent price dip seems to be linked to long-term holders deciding it's time to cash in. Between Dec. 4 and Dec. 7, these seasoned investors moved about 179,000 BTC, according to on-chain analyst Mignolet.
Bitcoin Price Perfomance
This significant movement suggests that long-term holders are taking profits, which can increase selling pressure and push Bitcoin's price downwards.
Historically, high profit/loss (P/L) ratios have been like a flashing neon sign for profit-taking by long-term holders, often signaling we’re near a market top. These seasoned hodlers cash in while the going’s good, putting downward pressure on prices.
In some bullish phases—like the 2020-2021 bull run—a sky-high P/L ratio doesn’t necessarily spell doom. Instead, the selling pressure gets soaked up by eager retail investors, creating a capital rotation.
A situation much more similar to passing the Bitcoin baton from the pros to the newcomers, to pump more action into the ecosystem.
Maybe #Bitcoin will Simpson Roundtrip here! pic.twitter.com/Zc9SxnquiH
— Crypto Rover (@rovercrc) December 10, 2024
Bitcoin Technical Analysis
Bitcoin's price decline over the past 24 hours can be attributed in part to weakening technical indicators.
One key factor is the growing bearish divergence between Bitcoin's rising price and a declining Relative Strength Index (RSI) on the daily chart.
This divergence indicates a loss of upward momentum, which often signals an impending price correction, as observed in the current market conditions.
Additionally, Bitcoin's recent decline aligns with its prevailing rising wedge pattern, characterized by the price moving within two converging, ascending trendlines.
On Dec. 9, Bitcoin tested the upper trendline of this wedge as resistance, prompting a sharp pullback toward the lower trendline support observed today.
Normally, rising wedges are considered bearish reversal patterns. They typically resolve when the price breaks below the lower trendline, with the potential downside equating to the wedge's maximum height.
Applying this principle to Bitcoin's current wedge pattern suggests a downside target for December in the range of $87,450 to $94,000, contingent on the exact point of breakdown.
Total Liquidations Exceed $1.7 Billion Over the Last 24 Hours
At the same time, the last 24 hour’s crypto volatility led to total liquidations exceeding $1.54 billion. According to data from Coinglass, approximately 583,530 traders were affected, with long positions accounting for at least $1.365 billion of the liquidations, while short positions comprised around $183.05 million.
This substantial liquidation event underscores the inherent risks associated with leveraged trading in the cryptocurrency market, where rapid price movements can trigger forced closures of positions, resulting in considerable financial losses for traders.
The wave of liquidations came in the wake of Bitcoin's recent price correction, with the leading cryptocurrency dipping to an intra-day low of $94,150 on Binance.
Abimbola Adu
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