Bitcoin (BTC) is facing significant challenges in breaking through key resistance levels, with prices struggling to hold above $106,000 since early November. This persistent resistance is largely driven by long-term Bitcoin holders increasing sell pressure, as those who have held coins for over six months begin to offload their assets. Historically, such selling signals a shift in sentiment among confident investors, potentially reflecting concerns about short-term price action or profit-taking after past rallies.
A notable example involves Owen Gunden, an arbitrage trader from the Mt. Gox era, who transferred over 1,800 BTC (valued at more than $200 million) to the Kraken exchange in the past week alone. This movement from dormant addresses has raised questions about waning long-term confidence, especially amid a 20% pullback from Bitcoin's all-time high of $126,220.
Compounding the issue, the US Dollar Index (DXY) has strengthened due to robust US economic data and potential interest rate hikes, reducing risk appetite for assets like Bitcoin. The inverse correlation between the DXY and BTC price means a stronger dollar makes Bitcoin more expensive for global investors, dampening demand. Despite $524 million in net inflows into Bitcoin spot exchange-traded funds (ETFs) on a recent Tuesday, buyer sentiment remains muted, failing to lift prices.
Additionally, traders are rotating toward privacy-focused altcoins, with Zcash (ZEC) surging 99% and Decred (DCR) up 74% over the past 30 days, diverting attention from Bitcoin. Companies like MicroStrategy, which previously leveraged Bitcoin reserves, now face reduced incentives for further purchases as the price downturn erodes the mNAV premium, limiting corporate buying support. For Bitcoin to regain bullish momentum, a slowdown in long-term holder selling and a weakening dollar are crucial, with market watchers eyeing upcoming economic data and Fed commentary for cues.
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