Bitcoin has demonstrated remarkable resilience, absorbing the impact of massive sales from early holders and maintaining its trend above the $100,000 mark.
The pioneering cryptocurrency experienced a slight decline of 2.6% today, relinquishing gains made over the weekend. Bitcoin surged from $108,350 on Friday to $111,200 on Sunday, but at the time of writing, it has failed to break above $108,000.
Notably, this period of sideways price action resulted in Bitcoin closing October in the red for the first time since 2018. The cryptocurrency recorded a 3.87% decline last month, marking the end of a six-year uptrend streak.
Profit-Taking Fueled Correction
The crypto trading platform QCP Capital, based in Singapore, attributed this price correction to profit-taking among long-standing Bitcoin whales. The firm observed that long-term BTC holders offloaded 405,000 BTC over the past month, exerting significant selling pressure on the asset's price.
QCP Capital also noted that these whales continued to sell even today, citing a substantial Bitcoin transfer to the crypto exchange Kraken. This ongoing trend, observed throughout October, casts doubt on the trajectory of the premier digital asset, despite the absence of clear macroeconomic headwinds.
This disposition has not only impacted Bitcoin but has also influenced the broader cryptocurrency market. For perspective, as whales liquidated Bitcoin, long-term XRP holders were also selling, with an average of 260 million XRP being sold daily.
Current State of the Market
Remarkably, QCP Capital highlighted Bitcoin's resilience in maintaining crucial support levels. Despite the significant sell-off, estimated at over $43 billion, from legacy holders, Bitcoin continues to hold above the psychologically important $100,000 price level.
Currently, the crypto market remains flat. Analysts at the crypto trading platform suggest that this trend could persist until the whale sales subside. Volatility saw a slight increase over the past week, with traders showing a greater interest in put positions. However, the market skew indicates a degree of caution among bears regarding further downside for Bitcoin.
Furthermore, leverage sizes suggest a cautious approach, as futures open interest has decreased since the October 10 crash. Funding rates are also flat, indicating that investors are remaining on the sidelines to observe the next market movements.
Corporate firms are also acquiring Bitcoin at a slower pace. For context, one firm purchased only 778 BTC in October, representing a decrease of approximately 78% compared to its purchases in September.
Outflows from Bitcoin Exchange-Traded Funds (ETFs) further contribute to the cautious market sentiment. These investment vehicles recorded an outflow of $799 million last week, with BlackRock alone selling $403 million in BTC.
Just Another Correction or Something Deeper for Bitcoin?
The prevailing cautious tone and the continuous whale dumps raise questions about Bitcoin's price trajectory in the near term. The central questions are whether Bitcoin will continue to decline, potentially leading to a crypto winter, or if it will rebound to higher prices.
QCP Capital indicated that the subsequent price development remains unclear. The mixed signals from whale sales and institutional inflows, despite the latter being currently modest, are the primary reasons for this uncertainty.
This dynamic is why many suggest that this market cycle is different. Such significant whale activity in previous cycles would have typically signaled the end of a bull cycle. However, the continuous strengthening of institutional adoption is reinforcing the market's foundation.
Interestingly, prominent figures in the cryptocurrency space remain optimistic that Bitcoin will target new highs in the near term. Michael Saylor, for instance, believes Bitcoin would "grind up" to $150,000 by year-end. Additionally, Tom Lee of BitMine has predicted Bitcoin could reach $250,000.