Bitcoin (BTC) has been on a bullish run, rallying toward a new all-time high (ATH), especially following the inauguration of pro-crypto U.S. President Donald Trump. However, signs of a potential price correction are beginning to emerge as the cryptocurrency shows key indicators of an approaching reversal. After significant gains throughout 2023 and early 2024, Bitcoin’s recent price action has formed a shooting star candlestick, signaling a possible shift in momentum.
Increased Volatility and Sell-the-News Risk
The cryptocurrency market is no stranger to volatility, and Bitcoin’s recent price movement has been no exception. In the last 24 hours, over $638 million in leveraged positions were liquidated, with most of the liquidations impacting long traders. This trend has raised concerns that Bitcoin is nearing its peak in the current bull cycle, with the market primed for a potential correction. The heightened volatility coupled with these liquidations has fueled speculation that Bitcoin could soon enter a bearish phase.
This is compounded by the concept of “sell-the-news,” a common occurrence when positive news events, such as a new all-time high, fail to sustain momentum. Traders who bought in anticipation of this rally may now start taking profits, which could weigh heavily on Bitcoin’s price.
Bitcoin Approaching Distribution Phase
Bitcoin’s current trajectory appears to be transitioning into the distribution phase of its market cycle. The distribution phase typically signals the end of a bullish rally and marks the beginning of a longer-term bearish market. Analyst @Htltimor, active on the X platform, has pointed out that Bitcoin’s parabolic price increase since 2023 is likely at its end, and the market is now entering a more cautious period. The distribution phase often involves large holders or whales offloading their assets, which may have already begun.
Looking ahead, @Htltimor suggests that Bitcoin’s price could potentially dip to around $85,000 in the coming months, marking a necessary period of consolidation. This accumulation phase would allow the market to stabilize before the next major rally, which typically aligns with Bitcoin’s halving event in 2028. Such consolidation periods are not unusual after significant rallies and serve as a way to prepare for future price gains.
Institutional Support and Whale Activity
Despite the potential for short-term volatility, institutional investors and whale market participants seem unfazed. Bitcoin’s supply on centralized exchanges has been steadily decreasing, with around 2.19 million BTC currently held across exchanges. This reduction in supply suggests that large investors are accumulating Bitcoin, likely with a long-term strategy in mind. Furthermore, the approval of Bitcoin spot ETFs in the U.S. has added substantial fuel to the bullish sentiment, contributing to institutional buying pressure.
BlackRock’s IBIT and Fidelity’s FBTC have already amassed over $120 billion in net assets, further cementing the ongoing institutional interest in Bitcoin. Moreover, companies such as MicroStrategy have continued their Bitcoin purchases, adding to the growing trend of large-scale accumulation.
Looking Ahead: Bitcoin’s Support Levels and Market Outlook
Bitcoin’s path forward remains uncertain, but its transition into the distribution phase suggests a short-term price pullback may be imminent. A potential dip to $85,000 could occur as part of the market’s typical cooling-off process before the next major phase of price appreciation. While institutional support remains strong and whales continue to accumulate, traders should remain vigilant to price fluctuations and liquidity conditions in the coming months. Bitcoin’s longer-term outlook will likely depend on how the market absorbs the current volatility and sets up for the next rally.
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