Bitcoin's Bullish Surge Faces Potential Downturn as Technical Indicators Signal Exhaustion

Bitcoin's recent bullish surge may be approaching a point of exhaustion, potentially increasing the likelihood of a significant downturn.

Source: gazeteoksijen.com

After hitting a four-month low of around $53,550, Bitcoin has rebounded impressively, surging more than 21% in just two weeks to reach approximately $66,129 as of July 17. However, there are indications that a sharp correction could occur in the near term, driven by various technical indicators and on-chain metrics. The recent recovery in Bitcoin's price has been bolstered by a notable increase in inflows to spot Bitcoin exchange-traded funds (ETFs) and signs of selling pressure easing.

75% of Bitcoin's Long Term Traders Are Currently Experiencing Profits

According to a report from, the recent drop in Bitcoin's price to around $53,500 caused a significant portion of coins held by short-term holders to fall into a loss position. In contrast, long-term investors remained resilient, with almost negligible decreases in their profitability. Data indicates that during the price drop to $54,000, only 2.6% of long-term holders (LTHs), those who have held Bitcoin for more than 155 days, were at a loss. These LTHs primarily acquired Bitcoin during the 2021 bull run, when it reached its peak of $69,000 in November 2021.

The Percent Supply in Profit metric further reveals that 75% of the total Bitcoin supply was profitable at that time. Historically, this metric has shown similar levels during corrections in previous bull markets. As long as this metric remains above 75%, a significant majority of Bitcoin holders will likely remain profitable. High profitability among Bitcoin holders often signals FOMO (Fear of Missing Out), which can precede or coincide with price corrections. Based on this on-chain data, there could be pullbacks in Bitcoin's price in the coming days if long-term holders decide to capitalize on their gains.

Bitcoin's Price Remains Closely Tied To Global Economic Conditions And Monetary Policies

Positive economic indicators from the United States, particularly increased speculation on a potential interest rate cut in September, could provide further support to Bitcoin's bullish trajectory amid its ongoing recovery. According to the CME Fedwatch Tool as of July 17, futures rate traders have raised their expectations for a 25 basis point rate reduction in September to approximately 93.5%, up from 67.3% ten days earlier. This shift towards a more dovish stance has gained momentum following a promising Consumer Price Index report on July 11, widely perceived as favorable for Bitcoin and other risk assets.

Bitcoin's recent gains also coincide with significant inflows totaling $1.347 billion into investment funds based on Bitcoin, including US-based spot Bitcoin ETFs. Data from Farside Investors indicates that on July 16 alone, 11 US spot Bitcoin ETFs recorded daily net inflows of $422.5 million, contributing to a cumulative total of $723.4 million over the past two days. The favorable macroeconomic factors and the influx of investments into Bitcoin-based funds create a strong fundamental environment, decreasing the chances of a BTC price crash in the near future.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.