Headline: Bitcoin Exhibits Bearish Pattern Amid 19% Rally; Long-Term Confidence Persists Through Favourable Accumulation Amid Growing Profit-Taking
Key Takeaways:
- Bitcoin’s daily chart casts a bearish engulfing signal, coinciding with a shooting star, potentially signalling short-term exhaustion after a significant rally.
- The Miners’ Position Index surged to record highs, signaling increased miner selling pressure, though still considered below levels typically associated with market tops.
- Despite heightened panic selling during the dip, substantial accumulation occurred at the $116,000–$118,000 price zone, reinforcing longer-term bullish conviction.
Bitcoin (BTC) marked its first significant bearish signal on a daily chart since early May, notably forming a bearish engulfing candlestick pattern further confirmed by a concurrent shooting star. This development occurs after BTC staged a substantial rally, climbing approximately 19% in value over the preceding 21 days.
Data from analytics firm CryptoQuant demonstrates that the Miners’ Position Index (MPI) crossed above the 2.78 threshold, reaching its highest recorded level since November 2024. The MPI quantifies the volume of Bitcoin withdrawn from exchanges by miners relative to the one-year average. High values imply a greater probability of market sales stemming from miners, adding downward pressure. While this represents a concern, analysts note its elevation remains well below levels historically anticipated nearing major bull market peaks.
This caution is amplified by record-breaking realized profit and loss (P&L) figures from BTC deposits onto centralized exchanges, hitting an all-time high of $9.29 billion. This signals pronounced profit-taking activity among holders. Analyst Crazzyblockk interprets these indicators as potentially placing the market in a high-risk zone susceptible to amplified volatility.
Futhermore, trading platform Hyblock Capital issued a warning regarding elevated Bitcoin open interest, suggesting it is “approaching frothy levels.” Analyzing historical precedents, their commentary highlights that the confluence of “Fear & Greed Index in ‘Extreme Greed’ territories” and elevated open interest has historically foreshadowed “local tops and corrections,” although the timeframe is typically extended.
This recent dip indeed triggered significant selling, with over 50,000 BTC being offloaded at a loss within a 24-hour window, as identified by Bitcoin researcher Axel Adler Jr. This underscored investor anxiety following the pullback from recent newsworthy highs.
However, concurrent data presents a contrasting picture. Bitcoin’s cost basis distribution heatmap revealed robust buying demand. A total of 196,600 BTC, representing over $23 billion in purchases, occurred between the critical support/pivot levels of $116,000 and $118,000, despite the palpable selling pressure. This reinforces trader confidence enduring the temporary setback, suggesting ongoing fidelity to the longer-term bullish narrative.
Technically, Bitcoin retains its bullish long-term structure provided price consolidates effectively above the $112,000 level. This current period could serve as a necessary consolidation after a sharp ascent, allowing for deleveraging, price discovery, and the elimination of weaker holders.
While the bearish engulfing pattern warrants monitoring as potential exhaustion or reversal cue, it does not currently invalidate the fundamental upward bias as long as crucial support remains intact. Consequently, the likelihood of resuming the upward trend appears substantial if BTC holds the $112,000 floor, contingent on market sentiment managing the tug-of-war between short-term gains and long-term possibilities.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
