Who's Selling Bitcoin for Profits?
On-chain data from CryptoQuant highlights a notable increase in profit-taking for Bitcoin (BTC) during its surge from $90,000 to over $100,000 last week. However, the scale of profit-taking remains modest compared to earlier phases of 2024 or the 2021 bull run, as evidenced by the Adjusted Spent Output Profit Ratio (aSOPR).
- Historical Context: In March and April 2024, the aSOPR index rose significantly to 1.3–1.35, indicating widespread profitable transactions and heavy profit-taking. In contrast, the current readings are around 1.1–1.12, suggesting only moderate selling pressure. This reflects lingering optimism among investors, with many expecting BTC to climb higher.
- Long-Term Holders (LTH): Data from the Long-Term Holder SOPR (LTH SOPR) reveals that investors holding BTC for over 155 days have been selling in the past week. Yet, the volumes remain well below the peaks observed earlier this year, aligning with the aSOPR findings.
- Liquidity Concerns: On a macroeconomic scale, M2 money supply growth—a key liquidity indicator—has yet to show improvement. The global M2 growth rate (in green) has declined since October, signaling constrained liquidity. Future liquidity injections by central banks could act as a catalyst for stronger market momentum in 2025.
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Is This Correction an Opportunity?
Despite the current dip, the market's overarching trend remains bullish. The TOTAL crypto market capitalization has surpassed its 2021 all-time high (ATH), reinforcing the continuation of an uptrend. This suggests a higher probability of further expansion rather than a significant correction in the coming months.
- Four-Year Market Cycle: Historical patterns suggest that market peaks typically occur 77 weeks after a Bitcoin halving event. If history repeats, the current uptrend could extend into September–October 2025.
Altcoin Outlook: Optimism Ahead
Altcoins present a favorable growth outlook. Bitcoin dominance (BTC.D) is showing signs of repeating its cyclical pattern. Historically, about 33 weeks post-BTC halving, Bitcoin dominance declines sharply as capital flows from BTC to altcoins. This shift typically drives substantial growth in altcoin market capitalization (shown in red), as investors seek higher returns.
- USDT Market Share Trends: The weekly chart of USDT dominance has broken a seven-year uptrend that began in 2017, and the downward trajectory persists. This indicates that investors are prioritizing deploying USDT into BTC and altcoins over holding stablecoins. This trend is likely to continue into 2025.
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Strategic Considerations
For investors adopting a trend-following approach or relying on the market’s cyclical nature, the current environment may be an opportune moment to accumulate positions ahead of a potential bull market in 2025. While negative signals remain limited, prudent risk management and adaptability are essential to optimize returns amid market volatility.
Key Takeaways:
- On-Chain Insights: Profit-taking is occurring but remains moderate, indicating sustained optimism for BTC's long-term trajectory.
- Cycle Analysis: Historical patterns suggest a bullish continuation, with potential peaks in late 2025.
- Altcoin Momentum: Altcoins are poised to benefit from BTC dominance decline, offering lucrative opportunities.
- Liquidity Monitoring: Macroeconomic liquidity will play a crucial role in market performance.
By navigating these trends with diligence, investors can position themselves for long-term gains while mitigating short-term risks.
Disclaimer
The information provided in this article is for informational purposes only and should not be construed as financial advice. Cryptocurrency investments are highly speculative and involve significant risks, including the potential for loss of capital. Always conduct thorough research and consult a financial advisor before making any investment decisions.
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