According to a cryptocurrency analyst, the short-term price drops of Bitcoin may not be as severe as the 10% plunge last week, as selling pressure has decreased significantly after Bitcoin first crossed the six-digit mark. However, some remain skeptical about this.
"With the decline in actual profits and selling pressure, we can expect future price drops to not be as abrupt as what we experienced last week," the Bitfinex analysts said in a market report on December 9.
Signs of "easing selling pressure" are emerging
On December 6, Bitcoin (BTC) dropped nearly 10% from $103,493 to below $93,000 within 24 hours, just a day after it crossed the $100,000 mark for the first time on December 5, according to data from CoinMarketCap.
TinTucBitcoin reported that the sudden drop from $98,338 to $92,957 triggered over $303.5 million in liquidations of long positions within an hour, resulting in a total of over $404 million in liquidations within 24 hours.
However, the Bitfinex analysts said that there are signs of "market stabilization emerging."
"Actual profits RP, tracking the USD profits of the coins, peaked at around $10.5 billion per day during Bitcoin's run-up to $100,000. However, it has since declined to around $2.5 billion per day, reflecting a 76% decrease."
They explained that this suggests that profit-taking has "cooled significantly" and subsequent sell-offs may be "less dramatic in nature."
At the time of publication, Bitcoin was trading at $97,483, according to CoinMarketCap.
The Bitfinex analysts also said that Bitcoin's funding rates are "more stable," explaining that the market is transitioning to a "more balanced phase, where volatility is likely to be more contained and price swings less erratic in the medium term."
The current funding rate for Bitcoin on the world's largest cryptocurrency exchange, Binance, is 0.01%, according to data from CoinGlass.
However, James Check, the lead analyst at Glassnode, is still uncertain about the market stabilizing.
"The selling pressure from current Holders is very high right now, and in my view, completely overwhelming the demand from both ETF and MSTR," Check said in a post on X on December 9.
"There are a lot of hot signs," Check added.
Long-term Holders are seeing significant profits
The realized price of long-term Holders — the average price that long-term Bitcoin investors have paid — is $24,481, reflecting around a 400% average profit for long-term Holders.
TinTucBitcoin recently reported that as Bitcoin neared $100,000, there was a significant amount of selling from long-term Holders. Some analysts suggest this could signal a potential top that could catch traders off guard as buying demand wanes.
"It's like a game of musical chairs: enjoy the ride, but be prepared when the music stops," Maartuun, a contributor to CryptoQuant, said on December 8.