Bitcoin prices have seen a recent surge, reaching $111,331 after rising over 1%, despite a decrease in daily trading volume to $50.47 billion. However, Bitcoin is still a volatile asset and even with backing from big investment firms, Tom Lee, chairman of BitMine, warns that sharp drops of up to 50% are possible. ⚡️
Lee’s statement highlights the risks associated with holding crypto investments long-term. He emphasizes that Bitcoin’s past volatility underscores this reality. Despite this warning, Bitcoin has become a major investment for Wall Street and it remains the leading cryptocurrency globally, particularly in the US.
**Institutional Investment Driving Growth:** The past year has seen more than $1.2 trillion invested in Bitcoin through major exchanges, making it the biggest entry point for traditional investors.
**Bitcoin On-Chain Activity: High Demand Despite Volatility:** On-chain signals show that Bitcoin remains highly active and in demand despite price swings. Trading volume for on-chain perpetuals – a type of crypto derivative traded directly on the blockchain – hit all-time highs this October, with more than $1 trillion worth of notional value exchanged this month alone. The high trading volume from both institutional and retail traders further indicates strong market interest, even as prices fluctuate.
**Red Flags Emerging: Profit Taking or Loss Limiting:** However, some red flags are emerging. The number of Bitcoin transfers between wallets and exchanges has increased during price drops, potentially signaling some holders are looking to profit or limit their losses.
**Bitcoin Technical Analysis: Consolidation Zone and Potential for New Highs:** The chart shows Bitcoin is currently consolidating after a sharp drop from its recent highs near $126,000. However, the 200-day SMA at $108,445.78 acts as key support level, while the 50-day SMA sits just above the current price, creating resistance.
**Mixed Signals:** Technical indicators provide mixed signals; the RSI is neutral (47.34), while the MACD remains below its signal line, suggesting potential bearish momentum if buyers are unable to step in. Meanwhile, the ADX suggests a present trend with potential for either direction, indicating that any shift could be significant.
**Looking Ahead:** Despite technical and on-chain data showing Bitcoin’s resilience, bulls face a challenging path ahead. As market waits for a catalyst to push prices higher, maintaining above $108,000 is crucial. Failure to do so could lead to deeper corrections, as warned by Lee. A sustained price push past resistance at $114,200 and then $118,000 might potentially bring us back closer to recent highs. However, without a strong catalyst, the path to higher levels remains challenging.
**For further insight, readers are encouraged to explore related articles on BitMine’s recent investments, market analyses, and technical insights.**