Bitcoin (BTC), the leading cryptocurrency by market capitalization, recently surged to new yearly highs but encountered resistance, leading to a retracement to its weekly open. The cryptocurrency’s upward momentum has shown signs of near-term exhaustion, as highlighted by various indicators.
Bitcoin achieved a new yearly high of $45,000 in the past week, subsequently experiencing a notable pullback—its third such occurrence in 2023. On December 11, Bitcoin dropped, marking a turbulent period that saw over an 11% decline in the digital currency. This downturn raised concerns about increased volatility as the year approached its conclusion.
The cryptocurrency’s performance since Saturday reflects its most significant decline since mid-August, impacting broader crypto markets. While some analysts attribute the pullback to cautious speculators hedging their bets ahead of a recent Federal Reserve monetary policy meeting, the exact cause remains elusive. Many analysts consider the pullback as an anticipated correction, given Bitcoin’s impressive 152% year-to-date gain.
The recent correction can be attributed to short-term Bitcoin holders realizing profits in substantial amounts, interrupting the ongoing ascent. This profit-taking follows a period of rapid price growth in recent months.
Despite the short-term correction, there are positive observations in the market dynamics. notes that the prevailing sentiment among Bitcoin investors continues to favor “hodling,” with mature segments of the supply remaining largely inactive. On-chain analytics firm identifies a recent uptick in the number of addresses holding over 1,000 BTC, commonly referred to as Bitcoin whales.
The increase in whale addresses suggests growing confidence among larger Bitcoin investors. It’s important to note that the rise in whale addresses may not be directly proportional to Bitcoin price changes. However, the accumulation of Bitcoin by whales can impact market liquidity and contribute to decreased volatility.
As Bitcoin navigates through this phase of potential exhaustion, market participants closely monitor these indicators to gauge the cryptocurrency’s resilience and anticipate its future trajectory.