Bitcoin slips below $79,000 as short-term whales hold $9.07 billion in unrealized profit

Market sentiment strong but selling risks emerge

Despite this setback, the overall cryptocurrency market remains in a bullish phase. The widely followed Fear and Greed Index registered a reading of 72, signaling elevated optimism among investors. However, analysts noted that such high readings can also reflect greater investor aggressiveness, which may precede a market pullback.

Wallets holding Bitcoin for over five years have recently shown higher activity. While some of this movement could indicate profit-taking by long-term holders, several experts suggested that much of the activity might result from investors reorganizing or better securing their assets, rather than outright selling.

Meanwhile, data highlights a crucial area of concern regarding short-term whale holders. This group, which comprises investors with large Bitcoin balances acquired in the recent market cycle, is currently sitting on historically high paper gains.

Short-term whales post record unrealized profit

CryptoQuant contributor IT Tech reported that, on September 4, unrealized profits for short-term Bitcoin whale holders reached a record $9.07 billion. This is the highest level recorded since data tracking began in 2016. Although these profits dipped to $7.51 billion as Bitcoin’s price edged lower over the weekend, the figure remains among the top five all-time highs, all recorded in the past two weeks.

Short-term whales have a reputation for being more responsive to opportunities to lock in gains compared to longer-term holders. Such a large build-up of unrealized profit may represent potential selling supply if Bitcoin weakens further. Analysts caution that while high paper gains do not guarantee a sell-off, they do present a risk if the price of Bitcoin continues to consolidate or fall.

The record gains achieved by short-term Bitcoin whales present a potential source of selling pressure that could challenge the strength of recent support levels.

If these major holders start to realize their profits, it could amplify any downward movement and test Bitcoin’s ability to maintain its current trading range.

Mini dictionary: CryptoQuant is an on-chain data analytics platform specializing in cryptocurrency market intelligence and metrics used by traders and analysts to monitor exchange flows, holder behavior, and network activity.

Technical outlook for Bitcoin

Technically, Bitcoin continues to trade in a constructive pattern, but faces a challenging resistance zone between $80,000 and $82,850. Sellers have consistently emerged within this range, forming a supply area that buyers have yet to overcome. A sustained daily close above $82,850 would confirm a bullish breakout and potentially target the $87,476 level, based on the 78.6% Fibonacci retracement measured from Bitcoin’s $97,924 high to the $57,800 low.

BTC recently rebounded from the 50% Fibonacci retracement at $77,862, underscoring the significance of this support. Maintaining price action above this threshold would preserve the bullish structure with an upside target of $89,337 still in play.

However, technical indicators show signs of weakening buying momentum. The Moving Average Convergence Divergence (MACD) indicator has crossed below its signal line on the daily chart, a typically bearish signal projecting possible further consolidation or retracement.

Mini dictionary: The MACD, or Moving Average Convergence Divergence, is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price and is used to identify possible trend direction changes.

On shorter timeframes, the 4-hour Relative Strength Index (RSI) is at 50 and trending lower after exiting overbought conditions. An RSI at this midpoint reflects a balance between buyers and sellers, with diminished bullish momentum.

If Bitcoin loses ground below $75,233, the 200-day and 50-day exponential moving averages, at $72,778 and $72,348 respectively, provide a crucial support cluster. The 100-day EMA sits further below near $70,444, strengthening the overall support range.

Although Bitcoin is currently positioned well above all these long-term moving averages, the next move will likely be determined by whether buyers can absorb the selling pressure above $80,000. A strong breakout could aim for new highs, while any breach of major support might trigger a deeper correction.