Bitcoin (BTC) experienced a price correction early this week, dropping below $42,000 on Monday. This correction is attributed to an increase in circulating bitcoin that is currently in a profitable position, according to analysis from ETC Group.
André Dragosch, Head of Research at ETC Group, highlighted that the increase in profit-taking among bitcoin investors is evident in on-chain data showing a growing amount of coins in profit being sent to exchanges. The analysis revealed that 88.3% of bitcoin addresses and 77.6% of ether addresses are in profit, nearing the highest readings year-to-date.
However, the report emphasized that profit-taking activity has primarily occurred among short-term bitcoin holders, with the highest level of transfers in profit to exchanges by this group since July of this year. This has contributed to the current price correction due to increasing selling pressure.
Additionally, the analysis showed the first week of net outflows from crypto asset exchange traded products since early October, with net fund outflows totaling $18.2 million, primarily focused on bitcoin ETPs.
As of 9:20 a.m. ET, Bitcoin declined by over 4% to $41,980, with the global cryptocurrency market capitalization falling by over 4% to $1.64 trillion.
Historically, Bitcoin has experienced periods of price correction and subsequent rebounds, often driven by market sentiment and investor behavior. Understanding the factors influencing price movements and investor activity is crucial for navigating the volatile cryptocurrency market.
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