Bitcoin's Rally Creates Own Selling Pressure as Profit Margins Rise

Bitcoin's recent rally has created its own selling pressure as short-term holders sit on an unrealized profit margin of roughly 33%, the highest since December 2024, according to CryptoQuant. This high profitability creates a much larger pool of potential sellers.

The warning comes after Bitcoin climbed to an eight-month high near $87,400 before retreating. Despite this, CryptoQuant still considers BTC to be in a bull market, with its Bull Score Index at an 'extremely bullish' 90 out of 100.

However, the problem is not just that Bitcoin holders are profitable. Strong bull markets routinely absorb profit-taking when fresh demand is strong enough. The risk appears when available supply rises while demand starts weakening.

CryptoQuant says spot Bitcoin demand has contracted recently, while growth in futures activity has also slowed. This makes the current 33% short-term holder profit margin more significant: traders have a strong incentive to lock in gains precisely when marginal buying appears to be cooling.