Bitcoin's Rally Cools as Traders Hedge the Heat

Bitcoin (BTC) has recently experienced a slowdown after months of steady growth, trading above $111,000 amidst signs of market exhaustion. Analysts from CryptoQuant and Glassnode indicate that the market is showing stress, with significant selling from long-term holders, causing short-term holders to face potential losses. The recent pullback from the peak of over $126,000 signifies a movement of capital from spot markets to derivative markets, with traders adopting a defensive strategy. The cost basis for short-term holders now appears to be around $113,000, and slipping below this level could lead to increased selling pressure. Notably, ETFs have seen reduced inflows, and derivatives are becoming the primary focus, highlighting a cautious market sentiment. Options data reflects this caution as traders rely on hedging rather than pursuing upward trends. Overall, Bitcoin is currently in a phase of consolidation, with the market awaiting clearer signals before committing new capital.

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