While bitcoin is experiencing an uptrend in its price, rising 12.6% over the past week to trade above $66,000, Coinbase analysts in a report on Friday have revealed potential limitations to its upward trajectory due to the “increasing number of sell orders” on the exchange.
According to the reportThe recent appreciation in bitcoin's value has tempted many traders to capitalize by selling, which could curb future gains.
A wall ahead, what will happen to bitcoin then?
This report, which looks at the broader market landscape, was prepared by Coinbase researchers David Duong and David Han. They noted that sell orders have increased on Coinbase by 5% to 10% of the average price, indicating a strong desire not to see higher prices for the digital currency.
This suggests there could be a cooling from recent highs as traders take profits and reposition in response to current market conditions.
According to Duong and Han:
We may see some profit-taking at current levels and/or an increased willingness by market participants to sell on price appreciation, which may limit upward price movements.
These activities are essential indicators of market sentiment that could influence the value of bitcoin in the short term. In their analysis, Duong and Han also refer to data from Arkham Intelligence, which highlights some external factors that also influence selling pressure.
A major factor is the ongoing payments from Mt. Gox, which have seen nearly 50,000 bitcoins transferred 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 selling pressure to the market.
However, some positive factors could help offset the increase in sales demand. One of the most relevant factors is the political situation in the United States.
In July, US political dynamics changed dramatically, resulting in a significant depreciation of the US dollar; the DXY index (which measures the dollar against a basket of other major currencies) fell by more than 2%, according to the report.
Since bitcoin's value is primarily valued in US dollars, a weaker dollar means a higher relative value of bitcoin, which can provide a buffer against some of the downward pressure from increased sell orders.
Another obstacle on the horizon
In addition to the Coinbase report that has already signaled an imminent correction for bitcoin, legendary cryptocurrency trader, Peter Brandt, has also… x.com/PeterLBrandt/status/1813708386363666872″ target=”_blank”>shared a notable concern for the leading cryptocurrency.
Brandt reveals 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 ETF (exchange-traded fund), despite the hype.”
<img src="https://technicalterrence.com/wp-content/uploads/2024/07/Coinbase-analysts-warn-Bitcoin39s-bullish-trend-could-hit-a-wall.jpeg" alt="bitcoin chart shared by Peter Brandt on x” />
This statement suggests a worrying trend for bitcoin, indicating that rather than the asset breaking out of its current range, it has only continued to move to lower highs and lower lows.
bitcoin is trading at $66,447, up 3.9% from its previous lows of $63,229 over the past 24 hours.
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Featured image created with DALL-E, chart by TradingView
