Market Wrap: Long-Term Bitcoin Holders Trim Positions as Rally Stalls

Bitcoin traded in a tight range on Tuesday as extreme bullish sentiment appears to be cooling. The cryptocurrency was trading at around $62,000 at press time and is roughly flat over the past 24 hours.

The bitcoin Fear & Greed Index is starting to decline from its highest level in more than seven months, which suggests buyers are starting to take some profits after a nearly 45% rise in BTC’s price over the past month.

In the bitcoin futures market, leveraged funds on the Chicago Mercantile Exchange (CME) raised their bets against bitcoin rising to a record high in the week ended Oct. 19, possibly to profit from the widening gap between futures and spot markets prices, CoinDesk’s Omkar Godbole reported.

For now, technical indicators suggest limited pullbacks after a retest near the $60,000 support level in bitcoin’s price was achieved earlier this week.

Blockchain data show long-term bitcoin holders are starting to take some profits, which typically occurs when BTC reaches an all-time high.

Based on the current price cycle, profit-taking from long-term holders appears to be modest relative to extreme levels seen at the end of a bull market phase, according to a blog post from Glassnode.

The chart below shows significant accumulation of bitcoin around mid-September during a pullback in BTC’s price. And despite the slight profit-taking, current positioning by long-term holders is consistent with the early phase of a bull market, according to Glassnode.

The total balance of bitcoin on exchanges continues to decline, which suggests traders are holding coins in wallets instead of making them available to trade on an exchange.

“Relative to the circulating supply, the bitcoin balance at exchanges sits at levels not seen since January 2018,” Arcane Research wrote in a Tuesday newsletter. “This could suggest that the demand to sell is low at the moment.”

The last time the Bitcoin network locked in a major upgrade, in July 2017, the cryptocurrency’s price jumped almost 50% through Aug. 23 of that year, when the changes went live.

Now, as the original blockchain network prepares for its next big upgrade in November, an upgrade that is known as Taproot, few investors are expecting a price reaction anywhere near that scale.

BTC’s price has already doubled this year and hit a new all-time high near $67,000 last week. While further gains are possible, Taproot alone likely won’t be the catalyst, CoinDesk’s Lyllah Ledesma wrote.

Read more here.

Most digital assets in the CoinDesk 20 ended the day higher.

Notable winners as of 21:00 UTC (4:00 p.m. ET):

Notable losers: