Crypto News: Bitcoin (BTC), Ethereum (ETH) and XRP Supply In Profits At High Risk Levels, Further Correction Ahead?

High Profit Supply Risk for Bitcoin, Ethereum, and XRP: Is a Correction Imminent?

January 18, 2024

Bhushan Akolkar

Senior Journalist

Expertise : Cryptocurrency, Blockchain, Macro Finance

Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets.   He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.

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Despite robust inflows into Bitcoin ETFs in the past week, the Bitcoin price remains under considerable selling pressure, experiencing a 7% decline over the same period. Currently, the BTC price hovers around the $42,750 mark, exhibiting limited movement despite the increased activity in Bitcoin exchange-traded funds.

Bitcoin’s Supply In Profit At Risk Levels

Santiment, an on-chain data provider, reports that Bitcoin (83%), along with other altcoins like Ethereum (84%), and XRPLedger (81%) currently exhibit historically high-risk profit levels. These figures surpass their average ranges of 55%-75%, dating back to 2018.

Despite the potential for further cryptocurrency ascent driven by increased exposure from ETFs and positive news, a key indicator for sustained long-term growth would be a drop below 75% of their supplies in profit, according to Santiment.

BTC Forms A Golden-Cross

Bitcoin’s 50-week simple moving average (SMA) has recently crossed above the 200-week SMA, a phenomenon known as the “golden cross.” This event, appearing on the Bitcoin weekly price chart for the first time, is seen by market enthusiasts as a positive signal for asset prices.

The golden cross, indicating a potential long-term bull market, is a concept rooted in technical analysis and traces its origin to Japan. However, some traders caution that crossovers, while considered forward-looking indicators, may be subject to lag, as averages are based on historical data and reflect past price movements. The current golden cross on the weekly chart follows a significant Bitcoin rally of over 70% to $42,700 in the last four months.

BTC Price Action Ahead

Bitcoin struggled to break out of its range, remaining below the $43,000 level on Tuesday. Market participants expressed disappointment as BTC price action continued to be constrained beneath the crucial resistance point of $43,418, representing the lower boundary of a bearish imbalance zone according to the price chart.

Facing resistance at the 50% Fibonacci Retracement level, situated at $43,074 and derived from Bitcoin’s decline between November 2021 and November 2022, BTC encounters a key hurdle. Additionally, the lower boundary of the imbalance zone, spanning from $43,418 to $45,607, presents a second resistance level. Analysts suggest that once this gap is filled, Bitcoin’s price is likely to resume its downward trajectory.