According to data from Glassnode, the number of Bitcoin millionaire owners was over 20,000. While the number shows that many investors are profitable after BTC’s recent rally, it could also be a sign of a spike.
Glassnode analysts wrote:
“The number of # Bitcoin millionaire addresses (addresses with a value of ≥ USD 1 million worth of BTC) exceeded 20,000. It is the highest value since January 2018. ”
In the past 20 days, the price of Bitcoin has increased by around 31%. It massively outperformed both gold and the US stock market.
The number of Bitcoin addresses with balances over $1 million. Source: Glassnode
Is a minor take profit pullback becoming more likely?
With the price of Bitcoin rising so rapidly in a short period of time, the cryptocurrency market is often prone to pullback.
There are a large number of investors who hold onto high unrealized gains. Although the technical structure of high time frame BTC remains very optimistic, there is a risk that investors will take profits.
Cole Garner, an on-chain analyst, hinted that a “hell of a hold” could be coming soon. During previous bull cycles, large short-term corrections were made after a major BTC spike in the dominant cryptocurrency.
Previous Bitcoin cycles with major pullbacks. Source: Cole Garner
In the past 24 hours, Bitcoin rose 6% despite growing expectations of a minor pullback. However, Garner said that if the market continues to rebound, a “candle of hell” could follow. He said:
“Dynamic RSI daily. Hell Candle has followed pretty much every overbought DRSI signal that has been printing> 75 since the last bull market began. Though sometimes a leg comes up first, like today. ”
There is a variable
While expectations of a market decline after such a massive rally are typical of previous rallies, there is one variable.
In past bull markets, the Bitcoin futures market made up a large part of the market volume even during the buzz of 2017.
This time around, the spot market is leading the rally due to the decline in BitMEX and a general decline in futures activity compared to previous cycles.
It therefore remains to be seen whether spot market investors would be forced to sell at the USD 13,875 resistance level.
On the weekly chart, the $ 13,875 level has given sellers strong resistance for the past three years.
A counter-argument to this, however, is that there is little resistance above $ 13,000 to the all-time high of $ 20,000. As such, there is a good chance that retail and institutional investors will continue to bid over $ 13,000 and expect record highs to rise.
A well-known pseudonymous trader named “Loma” wrote:
“If BTC drops back to ~ $ 12,500 I’d be surprised. I can’t think of many examples where a bullish fortune in a bullish trend returns all of the expansion.”
The daily price chart of Bitcoin. Source: BTCUSD on TradingView.com