Bitcoin has been exhibiting a volatile price movement in recent days, drawing attention with sharp fluctuations and cautious recovery attempts. After a short-term decline, BTC managed to recover, but its momentum is quite fragile.
One of the most important issues here is the weakening of trust among one of Bitcoin's most influential groups. This could complicate a broader price recovery.
Bitcoin investors have seen a decline in profits.
Bitcoin long-term investors have increased activity on the selling side in recent days. According to on-chain data, the change in the supply of long-term investors over the past 30 days has fallen to its lowest level in the last 20 months.
Similar levels were last seen in April 2024; this indicates that selling pressure is again at its peak.
This table shows that long-term investors are shrinking their positions to protect their profits. As unrealized gains decrease, sales accelerate to avoid losses. Typically, in such situations, increasing supply that is not met with new buying demand suppresses price recovery.
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Macroeconomic indicators also add additional meaning to the picture. The net unrealized profit/loss metric of long-term investors has dropped to its lowest level on a monthly basis. This indicates that profits within this group are gradually eroding and sensitivity to price declines has increased.
Historically, a decline in the LTH NUPL indicator triggers defensive sell-offs. However, when the indicator declines further, selling pressure generally begins to decrease.
At those levels, long-term investors tend to pause their selling; this can allow Bitcoin's price to stabilize and even recover with increased demand.
At the time this article was prepared for publication, Bitcoin is trading at $87,900 and is hovering below the $88,210 resistance line. The asset briefly dropped below the $86,247 support but managed to recover afterwards. This indicates that buyers are still active at low levels, but investors are being cautious for now.
In the short term, there is a possibility of a rise towards $90,308. However, resistance coming from this level may limit gains. In the current environment where long-term investors continue to sell, it is likely that Bitcoin will experience price stagnation around the $88,201 band for a while; the market is trying to digest excess supply.
If long-term investors slow down their selling pace, the upward potential will increase. A decrease in selling pressure could create a new breathing space in the price.
In such a scenario, Bitcoin may break the $90,308 resistance and target $92,933. This movement invalidates the downward scenario and indicates that strong players in the cryptocurrency market have regained confidence.
