Will Bitcoin’s [BTC] rally fizzle out as short-term profit-taking resumes?

• Bitcoin shows multiple signals that the market is still in the short-term profit-taking phase.
• Long-term expectations remain strong, liquidations surge due to unexpected pullback.

The idea that Bitcoin [BTC] could be transitioning from a focus on short-term profit-taking to long-term hodling has been floated around in the last few days. The market may have reacted to those expectations, but what if short-term profit-taking is still in effect?

How many are 1,10,100 BTCs worth today

Let’s recap Bitcoin’s latest performance to fully understand the situation. Bitcoin has been rallying since mid-September and has so far achieved a 21% upside from as low as $24,920. This rally peaked at slightly above $30,000 in the last 24 hours at press time.

Source: TradingView

The rally has already started showing signs of a potential pullback but this wasn’t surprising considering that the price peaked at August’s resistance level. But that’s not all. The Relative Strength Index (RSI) revealed that the upside in the last 24 hours pushed into oversold territory. Interestingly, the latest rally occurred despite outflows in the Money Flow Index (MFI) which further adds to the probability of a reversal.

A leverage shakedown as long-term prospects show confidence

Note that BTC has already pulled back below the $30,000 price level. But it brings to question whether the selling pressure was growing. Exchange flows dipped in the last few days after peaking on 16 October. The latest exchange flow data revealed that demand was slightly higher than the amount of sell pressure manifesting through exchange inflows.

Source: Glassnode

Despite the higher exchange outflows, we should also establish whether the ongoing selling pressure has enough momentum. An assessment of whale activity is a great place to start since they have a substantial impact on price action. Glassnode data revealed that whales have been accumulating since mid-October.

The latest data further revealed that the number of addresses holding at least 10,000 BTC soared to a new monthly high. Addresses holding less than 10,000 BTC but over 1,000 BTC dropped by 1 address as per the latest analysis.

Source: Glassnode

The above findings suggested that Bitcoin may not be experiencing substantial selling pressure from whales. But where is the selling pressure coming from? Well, as noted earlier, the market has been shifting in favor of a long-term focus.

Such an outcome is bound to encourage more people to execute leveraged long-term trades. Leveraged liquidations could thus be contributing to the ongoing selling pressure.

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Additionally, market data revealed that long liquidations soared above $200 million in the last 24 hours. The cumulative potential liquidation peaked at $7.16 billion. Note that this only represents data on Binance.

Source: Hyblock

A dip in the level of leverage was observed after the pullback. However, the cumulative potential liquidation dropped to $5.46 billion after the slight pullback. This signals that there is still a substantial number of leveraged long positions. As such, bullish expectations in the futures segment remain high.