Experts Warn of Bitcoin Correction Risks Amid High ‘Paper Profit’ Volumes

On-chain researcher and CryptoQuant author Axel Adler Jr. observed that 94% of Bitcoin’s supply is “in profit.” According to his observations, most coins were acquired at the $55,000 mark.

94% of the Bitcoin supply is in profit, with the majority of coins having been purchased at the $55K level. pic.twitter.com/ccHeFIJJa3

— Axel ?? Adler Jr (@AxelAdlerJr) October 22, 2024

Expert Checkmate noted a “shift in sentiment” in the market. As an example, he cited short-term investors purchasing digital gold at local lows in recent months.

Over 94% of the #Bitcoin supply is now back in profit.

In particular, Short Term Holders have been rewarded for buying the chopsolidation dip in recent months, with almost all of their holding back in the money.

This reinforces Buy-the-Dip behaviour, and is a sentiment tailwind pic.twitter.com/97yw1Dqp9I

— _Checkmate ??⚡☢️?️ (@_Checkmatey_) October 21, 2024

Historically, such high levels of unrealized profit have been precursors to significant price corrections for the leading cryptocurrency. 

For instance, when this metric reached similar levels at the end of September, by the beginning of the next month, Bitcoin “slipped” from $65,800 to $60,000 (-8.7%) as many market participants locked in short-term profits. 

Bitcoin’s price has shown similar dynamics against the backdrop of analogous on-chain indicators in past cycles, such as during the bull markets of 2017 and 2021.

Resistance at $69,000

On October 21, Bitcoin’s price reached $69,000 but then corrected to around $67,000.

“Currently, BTC is facing resistance in the form of a major liquidity zone,” noted a Japanese trader known as Jusko Trader.

In his view, the recent price pullback was “healthy” and represents a sort of reset before resuming growth.

Analysts at Greeks.live noted a significant increase in funding rates on the Bitfinex exchange — up to 30% per annum. In their opinion, this is a strong bullish signal, indicating an increase in positions by major players.

Previously, options traders bet on Bitcoin rising above $80,000.