Bitcoin drops under $50K as on-chain data and BTC market structure hint at profit-taking

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Bitcoin (BTC) breached $50,000 on Feb. 12 for the first time since December 2021 after rallying 15% in February.

However, as shown on the daily chart, BTC currently faces overhead resistance at $50,000, and the price retraced by over 2% on Feb. 13 after the United States Consumer Price Index report indicated 3.1% annual inflation, which was higher than the consensus expectation.

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BTC/USDT chart. Source: TradingView

Bitcoin is “close to another transitional phase”

Bitcoin holders have enjoyed a positive start to 2024, but data from blockchain analytics firm Glassnode suggests that the market may enter a transitional phase. Long-term BTC holders have spent more than 300,000 BTC since November 2023.

Since 2021, Bitcoin has registered a daily close above $50,200 for only 141 days, accounting for 2.84% of its trading history. The current price puts a majority of investors in a favorable position, where they may start taking profits. In fact, only 13% of the total supply is in a state of loss above $48,000. This data set coincides with BTC’s recent unspent transaction output (UTXO) ratio data.

UTXO refers to a transaction output that can be used as input in a new transaction. The UTXO ratio is defined as the number of transactions in profit or loss by comparing the price when a particular UTXO was created or destroyed.

When the UTXO ratio is high, it means the coins haven’t moved since they were created during that transaction. After BTC reached $50,000, the UTXO ratio reached 96.62%, which signaled that investors were beginning to see more profit.

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Bitcoin unspent realized price distribution chart. Source: Glassnode

On the other hand, short-term holders (STHs) have undergone a reset. During the spot exchange-traded fund (ETF) rally, the STH supply in profit peaked at 100%, but BTC’s correction to $38,000 reduced its average to 57.5%.

Bitcoin ETF inflows soar

Meanwhile, spot Bitcoin ETFs witnessed high net inflows last week. According to Bloomberg senior ETF analyst Eric Balchunas, the net cumulative flows for 10 ETFs reached over $3 billion. Additional data from a CoinShares report also highlighted that the total crypto assets under management reached $59 billion, the highest since 2022.

The strong Bitcoin ETF inflow has pushed the Coinbase premium index into a premium, indicating rising buying pressure on the exchange.

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Bitcoin: Coinbase premium index. Source: CryptoQuant

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.