Key Points
- Aggressive selling during Bitcoin’s rally led to a surge in realized profit to $1.5B on the 3rd of June.
- If the current selling trend continues, a breach below $104K could drag BTC to $102.7K.
After a three-day climb that saw Bitcoin surge to $106.8k, the cryptocurrency quickly retraced to $105.2K, indicating profit pressure.
This uptrend did not materialize as expected due to holders and investors deciding to sell, leading to an intensified selling pressure from all market participants.
Profit-taking hits $1.5B in one day
Glassnode observed this increased selling activity. The data shows that on the 3rd of June, Bitcoin experienced three separate hourly surges of $500 million, totaling $1.5 billion in realized profit.
This is one of the most aggressive profit-taking waves since the recent rally began. As Bitcoin reached new highs, sellers locked in significant returns, with the average coin capturing a +16% profit.
This suggests that most sellers are in profitable positions. With prices continuing to rise, fewer than 8% of trading days have been more profitable for investors.
Short-term holders lead the exit
So who is selling at such a high rate? Data from CryptoQuant indicates that short-term holders are selling aggressively.
When the realized price spiked, it was mainly driven by short-term holders. Many appear to have closed positions once Bitcoin cleared $106K.
The selling trend among short-term holders is also due to Bitcoin’s Net Unrealized Profit declining.
After Bitcoin pulled back from a recent high, the gap between the current market price and average cost basis for short-term holders shrank. Those who recently acquired Bitcoin are now seeing less profit or making losses.
This surge in profit-taking behavior is concerning. High selling pressure often leads to downward pressure on prices. If short-term holders continue to close positions, it could result in Bitcoin making more losses.
A continued surge in realized profit will see the Bitcoin stock-to-flow ratio dip, negatively impacting price action.
If these conditions persist, Bitcoin could breach its critical support level of $104k and dip towards $102,683.
