Bitcoin price slips below $42,000 as short-term holders take profit
Bitcoin is experiencing a price correction after an increase in the circulating supply of BTC that is in profit, an analyst said.Profit-taking activity has predominantly been observed among short-term bitcoin holders, a report added.
Bitcoin BTC -4.54% is seeing an an early-week price correction, with the digital asset slipping below $42,000 on Monday.
According to analysis from ETC Group, the price correction is linked to an increase in circulating bitcoin that is currently in a profitable position.
"Crypto assets have recently pulled back as bitcoin investors are increasingly taking profits," ETC Group Head of Research André Dragosch told The Block, pointing to on-chain data that shows an increasing amount of coins in profit being sent to exchanges.
According to Dragosch, the overall market is in a strong profit environment, which means that some investors might be inclined to take profits on their positions. The ETC Group analysis said 88.3% of bitcoin addresses and 77.6% of ether addresses are in profit.
"These percentages are close to the highest readings year-to-date," ETC said in a report.
However, the report emphasized that profit-taking activity has primarily occurred among short-term bitcoin holders, those with a holding period of less than 155 days. "Short-term holders' transfers of bitcoin in profit to exchanges has reached the highest level since July this year. This has certainly held back the current rally a bit due to increasing selling pressure," the report added.
Crypto funds see net outflow
According to the ETC Group analysis, last week saw the first week of net outflows from crypto asset exchange traded products since early October. "In aggregate, we saw net fund outflows to the amount of $18.2 million for the week ending Friday," Dragosch said.
According to the analysis, most of these outflows focused on bitcoin ETPs , to the sum of $13.1 million. However, ether ETPs managed to attract net inflows of $5.8 million.
Bitcoin declined by over 4% at 9:20 a.m. ET, changing hands for $41,980. The global cryptocurrency market capitalization has also decreased, falling by over 4% to $1.64 trillion.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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