Bitcoin has exceeded expectations to reach a 2-year high of 57,000 but analysts still expect a pre-halving dump
On February 26, Bitcoin surged to its highest point in over two years, reaching $57,000. The cryptocurrency experienced a 9 percent increase, briefly touching the milestone before retracing back to around $56,100 levels, according to data from trading view.
The pump has been attributed to several factors including the upcoming halving and the growing optimism caused by sustained investor demand since the exchange-traded funds (ETFs) approval.
According to the most recent CoinShares report, institutional Bitcoin investment products attracted inflows amounting to $598 million over the past week signaling a growing institutional interest in Bitcoin.
Analyst considers It a “pre-halving top”
Rekt Capital, a renowned trader and analyst, suggests that Bitcoin halvings often present investors with a “final bargain-buying opportunity” at the onset of broader uptrends.
In one of his recent contents, Rekt Capital examined BTC price retracements observed during both the 2016 and 2020 halving events. The retracement around the 2016 halving reached 40% of the local top just before the halving, whereas the retracement in 2020 amounted to a 19% correction.
“A 19% retrace — so essentially mimicking a 2020 retrace around the halving event — would get us into $42,000, and that’s approximately the top of that reaccumulation range that we just broke out from.”
Analysts indicate the potential for profit-taking by short-term holders (STHs), adding to concerns about a potential downside in BTC price.
In a recent Quicktake market update on Feb. 25, CryptoQuant contributor CryptoOnChain highlighted the likelihood of profit-taking ahead. By examining the Short-Term Holders’ Spent Output Profit Ratio (SOPR) metric, CryptoOnChain concluded that conditions may be favorable for speculators to sell into the market.
The STH-SOPR metric measures the profitability of short-term investors holding BTC for 155 days or less relative to their purchase price. Historical data shows that when the metric’s 30-day moving average reaches local highs, BTC price retracements often follow.
CryptoOnChain asserts that Bitcoin is approaching the selling zone of short-term investors, a viewpoint supported by technical chart analysis.
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