As Bitcoin is experiencing an uptrend in price increasing by 12.6% in the past week to trade above $66,000, analysts at Coinbase in a Friday report have disclosed potential limitations to its upward trajectory due to “increasing sell orders” on the exchange.
According to the report, the recent appreciation in Bitcoin’s value has tempted many traders to capitalize by selling, which could curb further gains.
A Wall Ahead, What Happens To Bitcoin Then?
This report, which analyzes the market’s overall picture, was compiled by Coinbase researchers David Duong and David Han. They noted that sell orders have been rising on Coinbase within 5% to 10% of the mid-price, indicating a strong desire not to see higher prices for the digital currency.
This suggests there might be a cooling-off from recent highs as traders take profits and reposition in response to current market conditions.
According to Duong and Han:
We may be seeing some profit taking at current levels and/or a greater willingness by market participants to sell into price appreciation, which may limit price moves to the upside
Such activities are essential market sentiment indicators that could influence Bitcoin’s short-term value. In their analysis, Duong and Han also reference data from Arkham Intelligence, which highlights some external factors that are also at play contributing to the sell-side pressure.
One significant factor is the ongoing Mt. Gox repayments, which have seen nearly 50,000 Bitcoin moved to exchanges since July 5. Despite this, the Mt. Gox trustee still holds a considerable amount of BTC, adding a layer of uncertainty and potential sell-side pressure to the market.
However, some positive factors might help to offset the increased selling demand. One of the most relevant factors is the US political situation.
In July, the U.S. political dynamics shifted dramatically resulting in a significant depreciation of the US dollar; the DXY index (which measures the dollar against a basket of other major currencies) falling by more than 2%, according to the report.
Since the value of Bitcoin is primarily valued in US dollars, a weaker dollar means a higher relative value of Bitcoin which may provide a buffer against some of the downward pressures from increased sell orders.
Further Roadblock On The Horizon
Besides the Coinbase report that has already signaled an impending correction for Bitcoin, legendary crypto trader, Perter Brandt has also recently shared a notable concern for the top crypto.
Brandt discloses that while he is “impressed” by Bitcoin’s upward trajectory so far, “the sequence of lower highs and lower lows continues despite the halving, despite the [exchange-traded fund] ETf, despite the hype.”
This statement suggests a troubling trend for Bitcoin, indicating that instead of the asset having broken out of its current range, it has only continued to move in lower highs and lows.
Bitcoin trades for $66,447, a 3.9% rise from its previous lows of $63,229 in the past 24 hours.
Featured image created with DALL-E, Chart from TradingView