Bitcoin (BTC) is currently trading below $104,000, not too below its all-time high of around $110,000. The conditions are in place for a bullish breakout: a trade agreement between the United States and China, the expectation of interest rate cuts by the US Federal Reserve (Fed), and a strong inflow of institutional capital. In this context, the Fear and Greed Index which measures market sentiment is hitting "greed" levels, while global stock markets are also recovering and showing signs of risk appetite.
There's greed among Bitcoin and cryptocurrency investors. Source: CoinMarketCap.
The scenario couldn't be more favorable and yet, Bitcoin has been trading sideways for several days.
The obvious question is: Why hasn't it broken out? The answer could lie in the supply that still persists in the market, particularly from short-term holders who are taking profits after a cycle of strong gains.
As seen in the following image, taken from the Glassnode platform, short-term hodlers (those who hold their coins for less than 155 days) are in profit.
Short-term Bitcoin holders are in profit. Source: Glassnode.
Since these investors generally don't have a long-term interest in Bitcoin, when they see their numbers in the green, they tend to sell BTC in exchange for fiat currency or stablecoins to take profits.
It's worth clarifying that the activity of these sellers doesn't necessarily imply a trend reversal, but it could create temporary resistance, making it difficult to overcome certain key levels, such as $110,000. According to Iván Paz Chain, CEO of Trading Different, there is a strong concentration of liquidity in that price zone, so Bitcoin will tend to move towards it without many obstacles after breaking through the current barrier.
Until this supply is fully absorbed, the price will struggle to advance strongly to new heights. However, once this selling pressure is exhausted, the path could be clear for a new bullish rally. The market continues to watch, analyze, and wait. Bitcoin, for now, is taking a breath before it runs.
