Key Points:
Bitcoin has dropped 14% from its historical high of $124,500, leading to a decrease in BTC profit supply, indicating market fatigue.
A breakthrough of the supply zone between $112,000 and $116,000 is necessary to initiate the next upward movement.
Bitcoin (BTC) has fallen 14% from its historical high of $124,500, reaching a seven-week low of $107,400 on Saturday. The latest analysis indicates that this round of correction has pushed the market into a full net distribution phase, cooling the "euphoric phase."
According to Glassnode, when Bitcoin reached a new high in mid-August, the entire supply was in profit.
To maintain this state, continuous and strong capital inflows are needed to offset ongoing profit-taking. However, such situations rarely last long-term.
In the latest issue of The Week Onchain report, Glassnode noted:
"This phenomenon is typically reflected by the 0.95 percentile cost line, which is the boundary where 95% of the supply is in profit."
The recent euphoric phase lasted about 3.5 months, during which over 95% of the supply was in profit.
However, Glassnode stated that on August 19, Bitcoin fell below this range, indicating that "demand has finally shown signs of fatigue."
Currently, 90% of Bitcoin's supply is in the profit range, situated between the 0.85 to 0.95 percentile cost line, or the range of $104,100 to $114,300.
"Historically, this area often serves as a consolidation corridor after euphoric peaks, frequently leading to market sideways movements," Glassnode wrote, adding:
Similarly, the percentage of profit from short-term holders' supply has plummeted from over 90% to just 42%, indicating a typical market cooling.
Glassnode further explained:
As BTC's price recently rebounded to $112,000, over 60% of short-term holders' supply returned to the profit zone. However, Glassnode believes this rebound remains relatively weak.
This week, Bitcoin has repeatedly faced resistance at the $112,000 mark, with bears actively defending this level.
Currently, the price is encountering strong pressure from the supply zone between $111,700 and $115,500, which also coincides with the 100-day and 50-day simple moving averages, as shown in the chart below.
Bulls need to convert this area into a new support level to confirm the end of this adjustment. Otherwise, there remains a risk of downward movement in the short term.
Trader and analyst Daan Crypto Trades stated on the X platform on Thursday that Bitcoin "continues to consolidate below the previous local range, failing to return above."
Cointelegraph reported that the 20-day exponential moving average (EMA) at $112,438 constitutes strong resistance, and Bitcoin's price needs to break through this level to confirm a higher low.
If a breakthrough occurs, it may signal the end of the adjustment phase, with BTC/USD likely to challenge historical highs again.
Related: After the latest increase by DeFi Development Corp, Solana (SOL) treasury size surpasses $400 million.
Original: “Bitcoin's 'Euphoric Phase' Cools, $112K Becomes Key BTC Price Level”
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