Bitcoin Retraces After Hitting All-Time High, But Bullish Potential Remains

• Bitcoin pulled back near $105,500 after reaching a new all-time high of $111,970, a normal occurrence during price discovery phases.
• Open interest in Bitcoin derivatives has surged, with the value of BTC options contracts hitting a record $46.2 billion.
• Profit-taking among investors has increased, but remains below extreme levels, suggesting Bitcoin still has room for further growth.

Bitcoin (BTC) experienced a further correction on Thursday, dropping over 1.5% to around $105,500. Analysts at Glassnode view the dip as a healthy part of Bitcoin’s price discovery phase, with profit-taking still at relatively low levels.

Bitcoin Maintains Upside Potential Despite Recent Pullback

Bitcoin continued its sideways movement below the key $110,000 level on Thursday, with prices remaining a few thousand dollars below its recent milestone of $111,970, an all-time high reached last week.

Using the Relative Unrealized Profit metric, Glassnode revealed that Bitcoin is approaching an euphoric phase in the current cycle. The indicator, which measures the level of paper profits held by investors, surpassed its +2 standard deviation band. The surge implies unusually high unrealized gains across the market. Rapid price movements and increased volatility often characterize these periods, but they tend to be short-lived.

Market participants matched this increase by taking profits. Although selling volume is on the rise, it has not yet reached extreme levels, indicating that the market as a whole has not yet experienced heavy distribution that typically precedes a peak.

“We have not yet reached the true euphoric heights seen during previous price top formations,” Glassnode stated in its weekly report.

Such a retracement is part of a healthy correction during a price discovery phase. Bitcoin’s price discovery is driven by an increase in unrealized profit among holders, which is often accompanied by increased selling pressure from investors looking to capitalize on their gains. Glassnode stated that larger buying volumes are key to maintaining upward momentum in Bitcoin’s price.

Furthermore, Glassnode highlighted that Bitcoin is consolidating within the +0.5σ to +1σ range, as indicated by the Market Value to Realized Value (MVRV) metric. This indicates that the market is not overheated and has room for further upside before extreme profit-taking occurs.

Bitcoin’s open interest (OI) for futures contracts has also increased since its $75,000 low in April, rising from $36.8 billion to $55.6 billion, marking a 51% increase.

Likewise, open interest in options contracts reached $46.2 billion, up from $20.4 billion during the same period, marking an all-time high. The $25.8 billion increase in options surpasses the growth of futures OI. Glassnode noted that the increase signals a maturing market where participants are using these contracts to fine-tune their risk management strategies.

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