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Bitcoin stabilizes beneath record peak as profit realization and tariff concerns temper price activity.
Bitcoin (BTC) is currently undergoing a constructive consolidation phase following last week’s peak of $111,880, yet it continues to encounter challenges from notable profit-taking activities.
A report from “Bitfinex Alpha” dated May 26 indicates that robust spot demand and consistent inflows into exchange-traded funds (ETFs) propelled BTC over 50% from the lows seen in early April, prior to President Donald Trump’s tariff warning on European Union imports, which initiated a risk-averse reaction across global markets.
The macroeconomic shock, combined with high leverage in perpetual futures, led to cascading liquidations, driving the price below the $107,000 mark within a span of 36 hours.
Nonetheless, this was a necessary cooling phase. During the pullback, futures funding turned negative, indicating that traders swiftly decreased their directional exposure while open interest declined as forced sellers exited their positions.
Profit-taking poses a risk to momentum
Two groups of sellers influenced the market: dip buyers securing significant profits and previously underwater addresses exiting at breakeven.
Their collective actions resulted in what the report referred to as an “overhead supply glut,” which could hinder price growth unless there is a corresponding increase in inflows. Data from exchanges reveals diminished incremental buying, while perpetual basis rates remain low following last week’s market shakeout.
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The analysis highlights that a phase of sideways trading or slight retracement would strengthen market structure by eliminating excess leverage and allowing spot demand to regain control.
Historically, such consolidation has preceded new upward movements. However, the report cautioned that the extent of any pullback will depend on macroeconomic developments, including further clarity on the proposed tariffs and whether ETF allocations resume at a similar pace.
Futures reset establishes trading range
In light of the macroeconomic uncertainty and profit-taking risks, the report anticipates Bitcoin will fluctuate between last week’s intraday low of $106,000 and the $111,000 range until new spot demand can absorb the overhead supply or a more significant reset attracts buyers at lower levels.
Seven consecutive weekly green candles demonstrate ongoing upward momentum, marking the longest streak since October 2023. However, the report observed that such movements often temper as leverage stabilizes.
On-chain data supports the observed slowdown. The cost basis for short-term holders (STH Realized Price) rose to $95,164, with selling accelerating once the market reclaimed that level.
Short-term holders realized $11.4 billion in profits over the past month, compared to just $1.2 billion in the previous month. Realized profit peaked at $747 million per day, a figure surpassed in only about 8% of Bitcoin’s trading sessions historically.
The report subsequently warned that the STH Realized Profit/Loss Ratio has surged into a range typically linked with late-stage rallies. At this stage, significant distribution could limit the upside if new capital does not enter to absorb it.
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