Bitcoin has struggled to maintain its upward momentum since reaching a new all-time high of $122,054 on July 14. At press time, the leading cryptocurrency trades around the $113,000 price level, marking a nearly 7.4% decline over the past 19 days.
Due to this pullback, the percentage of BTC’s supply in profit has declined, signaling waning investor confidence. As the new trading month runs its course, this trend could be a precursor to steeper price corrections.
Bitcoin’s Profitability Falls to 41-Day Low
According to Glassnode, BTC’s Percent Supply in Profit fell to a 41-day low of 91.71% on August 1. This metric measures the percentage of BTC’s circulating supply currently held at a profit. It measures market sentiment, often peaking during euphoric rallies and falling as investor confidence wanes.
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When this metric falls, a growing portion of holders is either breaking even or recording losses. These market conditions historically coincide with periods of market consolidation or potential price corrections.
The recent decline to 91.71% suggests that the broader market is cooling off after weeks of upward price action. It reflects a shift in sentiment, as fewer holders remain comfortably in profit.
This could dampen short-term buying pressure and leave BTC at risk of a further dip over the next few trading sessions.
Bitcoin Faces Key Test as Futures Traders Flip Bearish
BTC’s long/short ratio has tilted toward bearish territory, confirming that the bullish conviction among leveraged traders might also be fading. At press time, this stands below one at 0.96.
The long/short metric measures the proportion of long bets to short ones in an asset’s futures market. A ratio above one signals more long positions than short ones. This indicates a bullish sentiment, as most traders expect the asset’s value to rise.
On the other hand, a long/short ratio below 1 means that more traders are betting on the asset’s price to decline than those expecting it to rise.
With fewer traders willing to bet aggressively on continued upside, BTC may find it difficult to regain momentum unless fresh catalysts emerge.
Bitcoin’s Next Move: Breakdown to $111,855 or Breakout Above $120,000?
Bitcoin’s daily trading volume has dropped from its July peaks, signaling reduced market participation. If profit-taking strengthens, the king coin could potentially decline toward $111,855.
However, if new demand enters the market, the coin’s price could regain strength and climb toward $116,952. A breach of this resistance is key before the coin can rally back above $120,000.