As of Monday, May 26th, Bitcoin saw a slight decline, nearing $109,000 due to diminished trading activity during the US Memorial Day holiday.
Despite this small dip, Bitcoin maintained its strength, riding the wave of gains from the weekend and remaining close to its recent all-time high.
While Bitcoin consolidated its position, the larger digital asset market experienced some notable movements.
The CoinDesk 20 index, which tracks the leading 20 cryptocurrencies (excluding stablecoins, memecoins, and exchange tokens), identified Uniswap (UNI) as a standout performer with its token rising by 6.6%.
Chainlink (LINK) and Avalanche (AVAX) also enjoyed respectable gains of 3.3% and 3.4%, respectively.
Much of this uptick came overnight, bolstered by a change in US trade policies.
On Sunday, President Trump announced a delay in proposed 50% tariffs on EU goods, pushing back the start date to July 9.
This was in contrast to his earlier statement, which suggested the tariffs would be implemented on June 1, provoking a sell-off in various risk assets, including cryptocurrencies.
European stocks, initially rattled by the tariff news, rebounded upon hearing of the temporary delay.
Despite an overall positive sentiment that has driven Bitcoin close to record levels, experts indicate that the cryptocurrency may now be experiencing a phase of heightened volatility.
Traders are currently assessing a near 50% increase from the lows observed in April, as noted in a Monday report from analysts at Bitfinex.
One factor potentially hindering Bitcoin's immediate advancements is the increasing profit-taking among short-term holders.
According to the Bitfinex report, this group of investors has realized a significant $11.4 billion in profits during the last month.
This number reflects a considerable increase compared to the $1.2 billion in profits recorded in the previous month, indicating a notable surge in cashing out gains.
“At these levels, the risk arises that profit-taking may exceed new demand inflows,” the analysts from Bitfinex stated.
Unless new capital flows into the market to absorb this supply, prices might begin to stall or even decline.
The next few days will be crucial in determining Bitcoin's short-term outlook.
“The coming days will help establish whether the dip to $106,000 marks the lower end of the range or if a larger correction is on the horizon,” the Bitfinex report emphasized.
Should a deeper pullback occur, a critical support level to watch will be the short-term holder cost basis, currently around $95,000.
This value represents the average price at which short-term investors acquired their Bitcoin.
Despite the potential for short-term fluctuations and profit-taking, analysts remain optimistic about the underlying trends.
They pointed to impressive inflows into US spot Bitcoin ETFs—totaling approximately $5.3 billion so far in May—coupled with low market volatility and a lack of speculative excess.
These conditions suggest that Bitcoin is likely to regain its upward momentum as it approaches the third quarter of the year after this consolidation phase.
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