Markets • June 4, 2024, 1:44PM EDT

Bitcoin's price touches $71,000, but volatility and sell-side pressures loom

Quick Take

Bitcoin’s price briefly touched $71,000, partly propelled by short liquidations.
However, Glassnode analysts forecast increased volatility and sell-side pressure from long-term holders.

Bitcoin short liquidations jumped to over $20 million in the past 24 hours, helping propel the largest digital asset by market cap to touch the $71,000 mark briefly.

Bitcoin is now changing hands for around $70,700, having increased over 3% in the past 24 hours, according to The Block’s price page.

The rise in bitcoin’s price over the past day saw a total of $27 million in liquidated bitcoin positions. The wider cryptocurrency market was hit by over $87 million in liquidations in the same period. Of these combined crypto liquidations, the majority — around $50 million — were short positions, according to Coinglass data.

According to Tuesday's QCP Capital report, "unprecedented inflow access for traditional capital around the world will undoubtedly keep bitcoin price supported, with bitcoin touching $71,000 into the New York session."

Sell-side pressure increasing from long-term holders

However, according to Tuesday's Glassnode market report, sell-side pressure is increasing from long-term bitcoin holders, who hold coins aged three months to three years. "We can expect that this cohort's incentive to sell more supply will grow should prices climb high, and elevate their unrealized profit further," the report added.

Glassnode noted that the reclamation of bitcoin's price above $68,000 over the past 24 hours puts only 0.03% of the long-term holder cohort in a position of loss. This has driven most of the short-term holder cohort back into holding unrealized profit. In contrast, analysts said the price surge has driven most of the short-term holder cohort back into holding unrealized profit.

Nonetheless, the report said, current conditions are "typical of the early euphoric phase of a bull market."

Market volatility expected in the near term

The Glassnode report foresees increased volatility after the bitcoin market's relative stability over the past week.

"Long and short-term holders have experienced a reset in their sell-side risk ratio, suggesting a new equilibrium has been found. This indicates that the market is ready to move, and volatility expectations for the near future should be heightened," the report added.

The GM 30 Index, representing a selection of the top 30 cryptocurrencies, increased 2.58% to 148.41 in the same period.

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