• Bitcoin fails to hold above the $27,500 level suggesting that it is vulnerable to a drop to $23,000.
• Short-term holders of Bitcoin have been taking profits in the past few days, as indicated by the Bitcoin short-term SOPR moving back above 1.
• US lawmakers are expected to soon pass a proposal to raise the debt ceiling which could be supportive for BTC and other cryptocurrencies prices.
Bitcoin Price Vulnerable To Drop
Bitcoin fails to hold above the $27,500 level suggesting that the gates to a downside to $23,000 are still open. As of press time, Bitcoin is trading 0.64 percent down at a price of $27,754 and a market cap of $538 billion. Popular trader Crypto Tony said that the move to $23,000 is very much possible.
Short-Term Profit Taking
Along with Bitcoin’s brief surge earlier this week on Monday due to news about US lawmakers passing a proposal for raising debt ceiling further, short positions started rising again showing that short-term holders were taking profits at these levels. On-chain resource Material Indicators noted: “As someone who frequently uses the phrase #WildWestWeekend in #Crypto, I actually believe the #Bitcoin PA we’ve seen for the past few days is legit”. The seven-day moving average of Bitcoin’s short-term holder’s (STH) spent output profit ratio (SOPR) has once again moved back again above 1 which signals signs of capitulation from traders and suggests more profit taking in near future.
US Debt Ceiling Proposal
US lawmakers are expected to soon pass a proposal that will raise debt ceiling further which could prove supportive for Bitcoin and other cryptocurrencies prices if passed into law. The announcement had pushed BTC price over 28K but lacked enough support causing all gains made earlier this week on Monday being erased recently.
On-chain analysis suggests that when STH SOPR reading is above 1 it means that traders are selling their holdings at profits while if it drops below 1 then traders are selling their holdings at losses or break evens levels or just holding them without making any profits or losses from them. Currently STH SOPR readings remain above 1 indicating more profit taking in near future by traders in fear of further downside movement in price levels near term if consolidation continues at current levels or breaks below 27K support level .
Overall assessment suggests that despite some positive news from US regulators regarding debt ceiling increase there isn’t enough buying pressure currently present in order maintain uptrend on higher side and therefore current consolidation phase may last longer than expected with chances of price dropping below 23K still open if current support levels around 27K gets breached significantly .