Bitcoin (BTC) has encountered a notable downturn, with a 2.3% decline, now trading around $115,300. This drop is largely attributed to a wave of profit-taking and renewed tariff disputes impacting broader financial markets.
Recent analytics from CryptoQuant reveal that the Bitcoin ecosystem has entered its third significant profit-taking phase within the ongoing bull market cycle. In late July alone, investors recorded substantial realized gains ranging from $6 to $8 billion, suggesting that many opted to capitalize on the cryptocurrency's recent price increase.
The current profit-taking wave was marked by elevated spikes in the Spent Output Profit Ratio (SOPR), a key metric showing whether sold coins are yielding a profit or resulting in a loss. This phenomenon was particularly pronounced among short-term investors. Furthermore, an influential "OG whale" sold off 80,000 BTC on July 25, intensifying this selling pressure.
Additionally, a new wave of "whale cohorts" has been identified. These investors, having accumulated Bitcoin in the last 155 days, were the most prominent sellers in this latest trend. Trade volumes surged with 70,000 BTC moving into exchanges shortly after the OG whale's sell-off, indicating a collective intent to cash out at what many considered peak prices.
This selling trend is not limited to Bitcoin. Ethereum whales, along with those holding Wrapped Bitcoin (WBTC), Tether (USDT), and USD Coin (USDC), also took advantage of the market, realizing profits of up to $40 million daily, indicating a broader shift in capital investment strategies.
Historically, such major profit-taking events have often prompted a market consolidation phase lasting two to four months before another significant price increase. Current indicators suggest that a similar trend might be emerging, particularly as interest from U.S. investors appears to be decreasing. The Coinbase premium, which tracks price differences between Coinbase and other exchanges, has recently flipped negative, indicating waning demand from American buyers.
Alongside these internal market dynamics, macroeconomic factors have re-emerged, contributing further to the cautious outlook. A fresh wave of global tariffs initiated by the White House is applying downward pressure on Asian markets, including Japan's Nikkei 225 and South Korea's KOSPI, both of which opened lower.
Bitcoin is not immune to these macroeconomic influences. Historically, digital assets often experience declines when tariffs are announced, as they typically follow the equity markets in these circumstances. While this correlation has shown signs of weakening, it remains significant.
The latest tariffs introduced by President Trump target Canada specifically and have rattled investor confidence across various asset classes, including stocks, bonds, and cryptocurrencies. The worries about renewed inflation and ongoing supply chain issues exacerbating market instability have led to a retreat from riskier investments.
Without a clear new macroeconomic catalyst or a resurgence of strong inflows, traders in the crypto market may remain cautious. Market maker Enflux highlights that until Bitcoin or Ethereum can reclaim recent local highs, price movements may remain volatile and lack a strong trend direction. This situation suggests that traders might experience a challenging phase of sideways trading, as market sentiment continues to fluctuate.
In summary, Bitcoin is currently navigating a complex landscape affected by both internal profit-taking waves and external tariff pressures. As investors reassess their positions amid these dynamics, the future trajectory of Bitcoin remains uncertain, characterized by periodic volatility and cautious trading habits.
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