- Profit-taking intensifies as Bitcoin trades at $95,000, still 13% below its all-time high of $108,000.
- Macroeconomic uncertainty looms, with conflicting interest rate outlooks from major financial institutions affecting Bitcoin’s price action.
Bitcoin’s on-chain risk indicator has reached its highest level in this bull cycle, raising concerns among analysts about potential market overheating. Prominent crypto analyst Willy Woo warns that despite widespread optimism, the current market conditions suggest caution in the coming months.
He highlights that Bitcoin’s Local Risk Model has surged to levels last seen during the 2021 bull run and the subsequent crypto winter.
Bitcoiners, sentiment seems uber bullish but I say take a cautious approach in the months ahead.
Risk is peaking for the first time in this cycle and there’s a ton of profit in coins that have been selling and plenty more profit-taking to go before we are properly reset. pic.twitter.com/J2KisHPxnK
— Willy Woo (@woonomic) January 10, 2025
Woo points out that this metric, which measures whether the market is overheated, signals a phase of increased profit-taking. Historically, such peaks have preceded short-term corrections, even in prolonged bull markets.
While this does not necessarily indicate the start of a bearish trend, it suggests that the current rally may be entering a volatile phase, as we mentioned in ETHNews reports.
Bitcoin Profit-Taking Accelerates as Price Remains Below ATH
The data shows that a significant amount of Bitcoin holdings are in profit, leading to an increase in sell-offs. Over the past year, Bitcoin has gained more than 120%, outperforming major asset classes, which has encouraged many investors to lock in profits.
Woo suggests that there is likely more selling pressure ahead before the market stabilizes, hinting at potential price dips before a renewed rally.
At present, Bitcoin is trading around $95,000, approximately 13% below its all-time high of $108,000, recorded just three weeks ago. This pullback follows a strong rally, raising questions about whether Bitcoin is entering a consolidation phase or preparing for another breakout attempt.
Macroeconomic Uncertainty and Interest Rate Outlook Impact Bitcoin
The broader macroeconomy is also adding uncertainty to Bitcoin’s trajectory. Bank of America has stated that it does not expect any rate cuts from the Federal Reserve (Fed) in 2024, citing strong labor market data as a key factor.
Last year’s rate reductions were among the drivers of Bitcoin’s price surge, meaning a shift in monetary policy could pose challenges for the crypto market.
In contrast, Citigroup maintains its projection of five rate cuts, although it now expects them to begin in May 2025, aligning with the Fed’s revised forecast. The divergence in monetary policy expectations is fueling market volatility, with Bitcoin reacting to shifting sentiment in global finance and economic policies.
