‘Bitcoin Is in a Profit-Taking Phase’: CryptoQuant CEO

In the last seven days, Bitcoin (BTC) has plunged by over 12.25% as general crypto market volatility persists. Amid this bearish outlook, CryptoQuant founder and CEO Ki Young Ju says Bitcoin is in a profit-taking phase and the coin could slip further as this trend continues.

Macro liquidity into Bitcoin could break the cycle

According to Young Ju, many traders who invested in Bitcoin earlier at a lower price before the rally are now choosing to sell. The move is motivated by the desire to lock in profits, a development that could slow momentum and keep prices down.

This profit-taking is further worsened by the historical precedent of Bitcoin. Referencing Bitcoin’s PnL Index, Young Ju noted that the Bitcoin market is entering a bear market. For context, the PnL Index looks at the average price at which all Bitcoin holders bought their BTC.

The PnL Index is able to show the volume of wallets in profit, and when a lot of people are sitting on profits as it is obtainable now, they tend to sell. This increasing selling pressure might slow down Bitcoin’s recovery momentum in the market.

Young Ju believes that unless something big happens, Bitcoin might be heading into a long cooling-off phase. That is, the coin could continue its downward volatility movement for a while if no significant shift occurs.

He maintains that only macro liquidity can override the profit-taking cycle. Young Ju opines that the current market might mirror the 2020 cycle.

As such, despite Bitcoin being in the profit-taking phase, if the market receives a huge liquidity flow, it could catalyze price stability and a reversal.

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As of this writing, Bitcoin is changing hands at $83,589.18, which represents a 1.35% increase in the last 24 hours. The coin earlier hit an intraday peak of $85,503.01 before dipping to the current level. The trading volume has also declined by 22.47% to $92.2 billion.

Analysts eye potential Bitcoin price bottom

With Bitcoin’s Relative Strength Index (RSI) already in oversold territory, analysts believe the coin could hit its lowest possible bottom at $78,000. Bitcoin may experience a full recovery once it slips further into a bear market.

Some notable stakeholders, like Raoul Pal, are not fazed by the volatility in the market. He considers it a routine market cycle reset that occurs with the flagship crypto asset. Pal says this pattern has been witnessed before and the coin will still rebound.