Bitcoin may continue to consolidate in the short term. A high valuation indicator is issuing a warning, indicating an increased likelihood of profit-taking by holders.
The sentiment analysis platform Santiment noted in a report on Monday that the market value to realized value ratio (MVRV) of Bitcoin (BTC)—an indicator used to measure whether the asset is overvalued—is currently at +21%, meaning that the average investor who purchased Bitcoin over the past year has realized a profit.
Santiment explained: "While it has not reached historically extreme highs, this is considered a mildly dangerous zone, with an increased risk of profit-taking."
According to CoinMarketCap data, as of the time of writing, the price of Bitcoin is $115,800, approximately 6% lower than the historical high of $124,128 set on Wednesday.
Bitcoin rose 10% within nine days of reaching a new high, but Bitfinex analysts stated in the market report that day that the "uptrend quickly faded" due to a lack of macroeconomic catalysts needed to sustain the price.
Typically, when Bitcoin reaches new historical highs and begins to consolidate or trend downward, investors are more inclined to take profits, fearing that the asset has reached a local price peak.
Bitfinex analysts added that Bitcoin may experience sideways price movement in the short term.
"The market is currently in a consolidation phase, taking a wait-and-see approach, as investors weigh the upcoming macro catalysts," the analysts stated.
One macro catalyst closely watched by many market participants is the Federal Reserve's interest rate decision on September 17. According to the CME FedWatch Tool, 83.6% expect the long-awaited rate cut.
Short positions in Bitcoin continue to increase. According to CoinGlass data, approximately $2.2 billion in short positions faced liquidation risk when Bitcoin rebounded to the historical high of $124,128.
However, Santiment stated that Bitcoin whales remain optimistic about higher price levels.
Santiment noted: "The largest holders of Bitcoin have not sold during this round of price increases."
Santiment added: "Wallets holding between 10 and 10,000 BTC are still actively accumulating after the historical high."
Related: Strategy increased its holdings by 430 BTC for $51.4 million last week.
Original article: “Bitcoin (BTC) Enters ‘Mild Danger Zone,’ Profit-Taking Willingness Among Investors Rises”
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