Bitcoin, Ethereum Upward trend tempered by profit taking
Key points to remember
- Bitcoin and Ethereum have both fallen over 6% in the past 24 hours.
- As foreign exchange inflows increase, analysts in the chain believe a peak in profit taking is underway.
- Further selling pressure could see BTC dip to $ 40,000 and ETH to $ 2,400.
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A significant number of Bitcoin and Ethereum tokens have flooded exchanges in the past 24 hours. Such market behavior suggests that investors are ready to take profit, resulting in a sharp correction.
Bitcoin Whale Book Profits
Holders of Bitcoin and Ethereum sell their assets.
Bitcoin suffered a major rejection from the psychological resistance level of $ 50,000. The flagship cryptocurrency has lost more than 3,000 points in market value, which is a 6.7% drop. Sudden downward pressure correlates with increased profit taking among large investors.
On-chain data and intelligence platform Santiment shows that wallet owners holding millions of dollars in BTC, colloquially known as “whales,” have reduced their holdings. In the past 24 hours, 1,000-100,000 BTC addresses have sold over 10,000 tokens, worth around $ 500 million.
Additionally, a significant number of coins have flooded known cryptocurrency exchange wallets. Channel analyst Will Clemente maintains that since August 20, more than 27,000 BTC have passed to trading platforms. Many influxes have gone to Binance.
The growing supply of BTC on known cryptocurrency exchange wallets along with the surge in whale profit taking paints a negative picture of Bitcoin’s price action. This technically suggests that the number of tokens available for sale has increased, thereby increasing the downside potential.
IntoTheBlock’s In / Out of the Money Around Price (IOMAP) model reveals that if sell orders continue to pile up, Bitcoin could find support at $ 45,735. Around this price point, nearly 856,000 addresses hold more than 440,000 BTC.
Such a large demand area may have the capacity to absorb some of the recent selling pressure. But if Bitcoin can overcome this hurdle, it could drop to $ 40,000.
On the flip side, the IOMAP cohorts show a rigid supply barrier ahead of the pioneering cryptocurrency. Around 915,000 addresses have already purchased 312,000 BTC between $ 47,880 and $ 49,270.
Holders who have been overwhelmed around this price point may try to balance their positions to avoid incurring large losses, thereby slowing any potential rebound.
Ethereum loses crucial support
The Santiment behavior analysis platform also saw a significant increase in the number of ETHs moved to trading platforms. In the last 24 hours alone, around $ 2 billion from Ethereum has been transferred to Binance.
In an August 25 video, chain analyst Dino Ibisbegovic argued that such a large increase in the number of ETH tokens held in exchanges represents a red flag for future price growth of Ethereum. He said:
“You can’t be 100% sure that all of these tokens are going to be immediately turned into selling pressure for Ethereum. But, it is certainly a sign that some large addresses may be looking to liquidate their positions and reduce their exposure for the time being.
The substantial increase in trade flows resulted in increased selling pressure, lowering the price of Ethereum by 7.4%. The second largest cryptocurrency by market cap fell to $ 3,080, cutting through a strong support level.
The IOMAP cohorts show that Ethereum needs to recover $ 3,200 as backing as soon as possible to prevent 890,000 addresses from selling the 9.68 million ETH they bought at this price point. Failure to do so could result in a sell-off that pushes prices toward the next critical demand barrier at $ 2,400.
It should be noted that Ethereum would likely resume its uptrend after a decisive close above the $ 3,200 supply wall. The rally could encourage market participants to buy, fueling another rise to $ 3,700.
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