Bitcoin's Wild Ride: Soaring Past $105K, Then Plummeting Back to Earth

The Thrilling Climb

Hold onto your hats, crypto fans! Bitcoin shot up like a rocket, blasting past the $105,000 mark early Monday morning. The crypto world was buzzing with excitement as encouraging trade deal developments fueled the fire.

The past few days have been a rollercoaster for risk assets, and Bitcoin (BTC) was no exception. After breaking the $100k barrier last week, it surged even higher, leaving investors breathless.

The Trade Deal Boost

Bitcoin wasn't the only one feeling the love. Stocks were also riding high, and BTC hit a multi-month peak of $105,000. The crypto's price skyrocketed alongside equities, thanks to progress in U.S.-China trade talks over the weekend. A White House announcement about a 90-day deal to slash reciprocal tariffs added even more fuel to the fire.

The Sudden Drop

But just when things were looking up, Bitcoin took a nosedive. The benchmark cryptocurrency plummeted back to $103k, leaving investors scratching their heads. Analysts are pointing the finger at profit takers, who swooped in and cashed out their gains.

According to the on-chain analytics wizards at Glassnode, profit-taking is likely behind this short-term dip. They took to X to share that BTC Supply Mapping shows strong demand, with the First-Time Buyers Relative Strength Index still sky-high.

The Profit Takers' Party

But while new buyers are still eager to jump in, momentum buyers are showing signs of weakness. Without follow-through, prices could take a hit. And guess who's crashing the party? Profit takers, that's who!

Glassnode's BTC Supply Mapping reveals that new demand is still going strong. The First-Time Buyers RSI has been holding steady at 100 all week. But Momentum Buyers? They're weak, with an RSI of around 11. And those Profit Takers? They're on the rise. If fresh money stops flowing in, we could be looking at a consolidation phase.

The Bullish Outlook

But don't panic just yet, crypto enthusiasts! Glassnode says that while profit-taking has picked up speed, Bitcoin might just enter a consolidation phase if new money doesn't come in. But the analysts at Bitfinex are staying optimistic, saying that macro tailwinds could help the bulls weather any short-term storms.

Capital is still pouring into BTC, with the benchmark digital asset's realised cap recently hitting a new all-time high, according to the Bitfinex Alpha report.

And get this: other indicators like exchange-traded funds inflows and a dip in coins held at a loss are painting a rosy picture for BTC.

The Future Looks Bright

"With spot volumes on the rise and institutional-led ETF flows coming in hot, Bitcoin is sitting pretty on a solid foundation," the Bitfinex analysts wrote. "As long as the macro conditions stay in our favor, any short-term dips will be gobbled up quickly, keeping the bullish momentum going strong. BTC is poised for a potential new run at fresh highs!"