Bitcoin Rally Slows as Short-Term Holders Take Profits

Bitcoin’s recent rally, which has seen the cryptocurrency surge by nearly 41% since hitting its year-to-date low of $73,273 on April 9, may be experiencing a slowdown. Analysts from Bitfinex have noted that the momentum behind Bitcoin's upward trajectory has begun to wane, signaling a potential period of consolidation or a local top rather than continued vertical acceleration. This shift is evident in the cooling of spot volume, weakened taker buy pressure, and intensified profit-taking, particularly among short-term holders who benefited from the price surge from levels below $80,000.

The analysts attribute this change to several factors, including order flow data and onchain metrics, which suggest that the market may be entering a phase of stabilization. Despite this short-term uncertainty, the broader market structure remains robust, with higher time frame support levels still intact. This indicates that while Bitcoin may be experiencing a transition phase, the overall market sentiment remains strong.

Looking ahead, the next move for Bitcoin will likely be influenced by macroeconomic factors and ongoing institutional demand, particularly from exchange-traded funds (ETFs). The recent streak of inflows into US-based spot Bitcoin ETFs, which have seen $4.63 billion in net inflows since June 9, is a positive indicator. Economist Timothy Peterson described last week’s $2.2 billion inflows as “massive” and expects the streak to continue, which generally correlates with upward price pressure.

Bitcoin traders are also closely monitoring the Federal Reserve’s July 30 interest rate decision. Lower interest rates are typically bullish for the crypto market, and the current market estimates a 19% chance that the Fed will lower rates at that meeting. This decision could have a significant impact on Bitcoin's price movement in the near future.

Some analysts remain optimistic about Bitcoin's prospects. Economist Donald Dean believes that Bitcoin is poised for further gains, with tight consolidation at the volume shelf. Capriole Investments founder Charles Edwards argues that long-term holder selling pressure has hindered Bitcoin's price growth despite recent institutional and corporate buying. He attributes this to long-term holders, or "Bitcoin OGs," who have been selling their positions since the launch of spot Bitcoin ETFs in January 2024. This selling pressure has contributed to Bitcoin's stagnation around the $100,000 mark, despite the institutional frenzy.