Bitcoin Rally Faces Profit-Taking Risk as Price Taps $79,491
Bitcoin's recent climb to a multi-month high has left buyers from the past five months sitting on paper gains. The price peaked at $79,491 on August 21, and analysts at crypto exchange Bitfinex attribute the move to spot demand and short covering, rather than fresh leverage.
In a statement to Bitcoin.com News, Bitfinex analysts noted that rallies built on borrowed money tend to unwind faster than those fueled by cash purchases. They added that this rally has a 'longer runway' due to a combination of ETF demand, macro shifts, and the absence of heavy selling.
The U.S. Department of the Treasury's announcement to double the maximum size of its long-end liquidity support buybacks from $2 billion to at least $4 billion may have contributed to the price increase. This move has historically shown a 90% correlation with Bitcoin prices since 2015, and cheaper funding at the long end tends to support risk assets.
However, Bitfinex analysts warn that the rally is not without risks, particularly if buyers from the past five months decide to take profits. If the price falls below $68,000, it could trigger a wave of selling, testing the rally's sustainability.