Bitcoin: When is it a good time to take profit?

Bitcoin’s accelerated surge over the past few days has placed BTC closer to the $30,000-mark, than its previous ATH of $20,000. After 2+ years of the bear market, Bitcoin seems to be making a move and unlike during the 2017 bull run, this time around, it isn’t FOMO driving the price higher, but actual demand.

While that may be true, we know that Bitcoin will need to correct itself at some point. Hence, the question – Is it actually the time to take profit. Is it at $27,000 or $29,000 or $30,000, even? This article will try to address that very question.

Should you take profits on Bitcoin?

Technical Analysis

Source: BTCUSD on TradingView

The following approach clearly highlighted over-leveraged indicators. For example, the RSI was in the overbought zone, while the Stochastic RSI was in the overbought zone too.

The price, however, showed that it had zoomed past its 1.618-Fibonacci level, with the cryptocurrency now within reach of knocking on the 2.272 and 2.414 Fibonacci levels at $28,258 and $29,783 levels, respectively.

Clearly, a retracement seemed likely, however, at the time of writing, the price seemed to be ignoring this and it did make sense, especially due to the influx of capital into the market from the institutional end.

So, in a nutshell, the technical analysis suggested that there should be a retracement and showed that if a drop should occur, it will take BTC to $21,200 or the previous ATH at $19,666. In the worst-case scenario, it might go to $18,000, but this seemed unlikely to be reliable.

On-chain

Source: CryptoQuant

Exchange reserves can also give some insights into what might happen. If this metric is high, then people might sell and hence, it would be bearish. However, if this metric is low, then the opposite might happen.

At press time, dropping BTC reserves on exchanges seemed to be grinding to a halt, with the metric likely to turn around soon, especially if Bitcoin continues to rise and touches $29,000.

Source: Twitter

Additionally, the spot reserve was also observed to be rising. So, is it bullish or bearish?

Well, CryptoQuant’s CEO Ki-Joung Yu stated that,

“BTC outflow from whales is a strong bullish signal. Otherwise, it’s a bearish one as whales tend to benefit from retail investors. We need more exchange outflows from whales before another leg up… I’m still very bullish on BTC in the long-term, and I think it’ll break $30k anytime soon.”

However, he also added that we should consider this “as a small bearish signal explaining why it’s hard to break $28.5k.”

Buying now would be extremely risky as Bitcoin might top at $30,000 and head lower and stay there for a while. Hence, it is advised to take precautions before investing and investing at these levels only if one is planning to hold for at least 2 years.

In conclusion, if you did buy Bitcoin at $10,000 or $15,000 or even $20,000, it is a good time to take a profit if you haven’t already. However, if you plan to hold your BTC over the long run, then you shouldn’t be selling here.