Key Points
- Bitcoin’s alpha price indicates it might be time for whales to take profits, but the realized price shows strong long-term bullish momentum.
- Bitcoin ETF flows continue to show bullish institutional interest, with $5.1 million in fresh capital this past week.
Bitcoin investors are currently facing a dilemma. On-chain indicators are giving mixed signals. The alpha price seems to suggest that it could be an appropriate time for profit-taking, while the realized price underscores the strength of long-term conviction.
A Warning for Early Whales
Bitcoin’s price has hit the Alpha 8 band. This is a zone that has historically coincided with significant profit-taking by long-term holders, also known as “OG whales”. This doesn’t necessarily mean the end of the rally, but it does suggest that risk-adjusted returns for new entrants could be decreasing.
Given the strong bullish momentum of the asset, this implies we are moving into a region where caution is advised. Experienced investors might start to scale out, while opportunistic traders could wait for a more appealing re-entry during a future correction.
Realised Price Continues to Rise
In contrast to previous cycles where downturns were preceded by a flattening or decrease in Bitcoin’s realized price, the current path is decidedly upward. This represents the average cost basis of all BTC holders and it continues to climb, indicating sustained capital inflows and growing conviction among investors.
As long as the realized price trends upward, historical precedent suggests the broader market remains in a growth phase. Therefore, despite potential short-term volatility, the long-term trend remains intact.
Institutional Demand is Steady
Bitcoin ETF flows continue to depict a bullish institutional scenario. Despite a volatile Q1 with periods of net outflows, recent weeks have demonstrated renewed strength in net inflows, resulting in $5.1 million in fresh capital this past week. Total net assets across spot Bitcoin ETFs have bounced back to $119.67 billion, in line with Bitcoin’s surge past $100,000.
With Bitcoin trading above $100K, those who accumulated below $70K may consider phased profit-taking, especially as the Alpha Price flashes caution. For ETF investors, the trend remains positive – holding makes sense as long as realized price climbs and SOPR stays above 1, indicating healthy profit-taking without panic selling. On the other hand, potential entrants should resist FOMO and instead watch for pullbacks as smarter entry points.
