Bitcoin Plummets as Traders Cash Out of Profits, Following Recent Rally

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Based on on-chain activities, analysts assert that there is massive profit-taking occurring in the market since Bitcoin (BTC) peaked at $42,600 on Sunday. As a result, the benchmark cryptocurrency plunged by over 10% since its recent peak.

On-chain analytics platform Glassnode noted that the big question in the mind of the BTC community is if this is a “Disbelief Rally,” where there is immense apprehension of the new bull rally, or simply a Bearish Relief Rally in a higher time-frame downtrend.

The analytics platform also noted that mass accumulation is taking place and shares a similar structure with the 2018 bear market.

Glassnode revealed that Bitcoin recorded a large volume of coin outflows from exchanges over the past week. The company noted that coin outflows currently rest around 100,000 coins per month, a level not seen since BTC broke the $20,000 barrier in November 2020. This outflow rate has caused the balance on crypto exchanges to drop to 13%, a three-year low.

That said, exchanges outflows are considered bullish indicators for the underlying cryptocurrency as it means liquidity drops significantly, causing a spike in demand and value.

Key Bitcoin Levels to Watch — August 3

BTC has fallen back into the $41,000 – $31,000 pivot zone as the market goes into correction mode following its 11-day-long bull run. BTC trading sentiment now resides in neutral conditions, as bulls will likely use the $38,500 as a ramp to drive prices higher.

That said, bulls need to act fast while defending the $38,500 support, as bears could pick up the mantle, given the neutral price action in the market, and begin another bearish campaign. In summary, the $38,500 level is the crucial level to defend (or conquer by bears) to determine the next possible near-term direction for the cryptocurrency.

Meanwhile, our resistance levels are at $39,500, $40,500, and $41,000, and our key support levels are at $37,500, $37,000, and $36,000.

Total Market Capitalization: $1.57 trillion

Bitcoin Market Capitalization: $724.8 billion

Bitcoin Dominance: 46.2%

Market Rank: #1

 

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