Bitcoin (BTC) has experienced a significant 12.25% decline over the past week, as ongoing volatility continues to shape the crypto market. This downturn has left many traders on edge, with some experts predicting that Bitcoin could face further declines in the short term.
According to CryptoQuant CEO Ki Young Ju, the current market is largely driven by profit-taking as investors look to lock in gains from previous rallies.
Profit-Taking Phase and Market Pressure
Young Ju points out that Bitcoin’s price movement reflects a typical profit-taking phase. Many investors who bought Bitcoin at lower prices are now choosing to sell in order to secure profits. This selling pressure is weighing heavily on the coin’s price, slowing down any potential recovery.
Bitcoin’s PnL Index, which tracks the average price at which holders purchased their BTC, indicates that a large number of holders are currently in profit. This trend has historically led to increased selling activity, which in turn puts downward pressure on prices.
The combination of this profit-taking behavior and low trading volume has contributed to a bearish sentiment in the market. Furthermore, Bitcoin’s Relative Strength Index (RSI) has entered oversold territory, signaling that the coin could hit further lows, potentially reaching $78,000 before any chance of a rebound.
The Role of Liquidity in Market Recovery
Despite the negative outlook, some notable figures in the crypto space, including Raoul Pal, maintain a long-term optimistic view. Pal suggests that the current market correction is a routine cycle for Bitcoin, and that the coin will likely recover as it has in past downturns.
However, he notes that a significant influx of macro liquidity is essential for a price reversal. Without such liquidity, Bitcoin may continue to struggle in the short term.
Bitcoin’s future price movements will depend largely on broader market conditions. While the current profit-taking phase and reduced trading volume contribute to a bearish outlook, a major injection of liquidity could help reverse the trend and restore market confidence in the cryptocurrency.