Bitcoin recovers above $44,000 but price correction risks remain says CryptoQuant

Bitcoin BTC +3.91% has recovered above $44,000, an increase of over 4% in the past 24 hours. The uptick comes after the digital asset plunged below $41,000 on Wednesday, causing the liquidation of over $500 million worth of leveraged positions across derivatives exchanges, according to Coinglass data .

The bitcoin uptick comes amid sustained spot bitcoin ETF anticipation and the release of U.S. Federal Reserve minutes on Wednesday, which showed policymakers are considering multiple rate cuts in 2024.

According to The Block's Price Page , the largest digital asset by market capitalization is now changing hands for $44,025 at 10:40 a.m. ET. 

Bitcoin has recovered above $44,000, an increase of over 3% in the past 24 hours. Image: The Block

Bitcoin price correction risks

However, according to a report released Thursday by CryptoQuant, short-term unrealized profits among bitcoin holders remain at elevated levels. "This historically has preceded price corrections as traders take profits," the report added.

This matches The Block's Data Dashboard , which shows the circulating supply of bitcoin in profit is currently 87.59%, close to a 12-month high. 

The CryptoQuant report also described sell volume as "still dominating in the perpetual futures markets." Data shows that the current taker buy/sell volume ratio has dipped below 1. CryptoQuant interprets this as a bearish signal, since it signifies a rise in sell orders within the market.

CryptoQuant data shows that over the past week, almost 28,000 bitcoin have been moved onchain. This increase in the BTC liquid supply on centralized cryptocurrency exchanges is interpreted as increasing sell pressure, according to CryptoQuant. "The upward trend in the exchange reserves typically suggests an increasing selling pressure, indicating that more coins from the exchange's holdings are potentially entering the market for sale," CryptoQuant added.

A spike in exchange reserves indicates sell pressure, according to CryptoQuant. Image: CryptoQuant.