Bitcoin Faces Short-Term Downward Pressure as Long-Term Investors Take Profits: Bitfinex Analysts

• Bitfinex analysts indicate that profit-taking by long-term investors could exert short-term downward pressure on Bitcoin.
• The flagship cryptocurrency Bitcoin (BTC) has been trading sideways in the $62,000 – $63,000 range, with investors who have endured long-term declines anticipating a substantial rise.
• However, a report from Bitfinex analysts may disappoint investors.

Bitfinex analysts warn that long-term Bitcoin holders taking profits could impose significant short-term downward pressure on BTC.

Long-term Investors’ Impact on Bitcoin’s Short-Term Dynamics

According to a report by The Block, Bitfinex analysts highlight that long-term Bitcoin holders have resumed realizing profits. This could signal an upcoming wave of profit-taking, which would likely exert downward pressure on BTC’s short-term price movement.

Profit-Taking: A Key Driver of Short-Term Pressure

Long-term investors, who had paused profit-taking since early May, appear to have resumed selling their assets. Continued sales by these holders indicate that the near-term outlook for Bitcoin is weak. Data shows that long-term holders started realizing profits at higher prices than the previous cycle peak of $69,000 in Q2 2024, albeit on a smaller scale. Despite Bitcoin trading below this peak, the situation persists.

External Factors Putting Pressure on Bitcoin

In addition to long-term investors, several other external factors are affecting the BTC price. Analysts note that German government BTC sales and anticipated sales following Mt.Gox repayments are adding pressure on Bitcoin’s price.

BTC’s Supportive Factors Amid Downward Pressure

Despite this downward pressure, there are supportive elements in play for Bitcoin. Bitfinex analysts point out a noticeable decline in miner sales and a net inflow into spot Bitcoin ETFs, which are bolstering BTC’s upward potential.

Additionally, the Personal Consumption Expenditures (PCE) index, a key inflation metric monitored by the Federal Reserve, remained unchanged in May. This stability has fostered optimism towards risk assets like Bitcoin.

Conclusion

In summary, while profit-taking by long-term Bitcoin holders and other external pressures are creating short-term downward pressure on BTC, several supportive factors are also in play. The reduction in miner sales and net inflows into Bitcoin ETFs, coupled with stable inflation metrics, provide a mixed outlook for Bitcoin heading into the near future.