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Bitcoin, the largest cryptocurrency by market capitalization, surged to new yearly highs before falling back to its weekly open. Bitcoin's surge appears to have run into resistance, with multiple indicators pointing to near-term exhaustion.
Bitcoin had reached a new yearly high of $45,000 in the past week before falling precipitously for the third time in 2023.
Bitcoin plunged to a low of $40,150 on Dec. 11 after a stormy stretch that wiped out over 11% of the largest digital currency and sparked forecasts of more volatility as the year came to a close.
The cryptocurrency has dropped since Saturday, marking its worst performance since mid-August. The drop from nearly $45,000 weighed down larger crypto markets as well.
Some analysts blamed apprehensive speculators who were hedging their bets ahead of the recent Federal Reserve monetary policy meeting.
However, most analysts were unable to pinpoint a specific cause, describing the pullback as an expected correction given Bitcoin's 152% year-to-date gain.
According to Glassnode, the recent price correction occurred as Bitcoin short-term holders took profits in statistically significant amounts, halting the rise. This comes after a period of rapid price growth in recent months.
Here's positivity
Glassnode observes that hodling remains the preferred market dynamic among Bitcoin investors, with mature subsections of the supply remaining largely dormant.
On-chain analytics firm IntoTheBlock spots a recent increase in the number of addresses holding over 1,000 BTC, or Bitcoin whales.
An increase in whale addresses shows that larger Bitcoin investors are becoming more confident. The rise in whale addresses is related to Bitcoin price changes, though not necessarily directly proportional.
The stockpiling of Bitcoin by whales is beneficial because it can affect market liquidity and volatility.
Alex Dovbnya
