BTC ETF optimism vs. profit-taking: Why Bitcoin’s $116K battle matters now

Key Takeaways

Why was Bitcoin unable to rally beyond $116k?

The weekend momentum was expected to continue, but short-term BTC holders used the price bounce to take profits, halting the rally at a key resistance level.

What is the argument behind Bitcoin being undervalued?

A crypto analyst used the ETF flows to calculate the fair value of BTC, showing how recent price action was a divergence from expectations based on capital flows.

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Bitcoin [BTC] rallied to $116.4k on the 27th of October. This was the short-term peak of a bullish push that began at the $107.5k range lows the previous Thursday.

Having reached a short-term resistance level, Bitcoin was forced to pull back in recent hours.

In a recent report, the importance of the $116k area was explained. It represented the mid-range resistance level as well as a key short-term magnetic zone for the price.

However, the selling pressure from profit-taking halted further price advances.

Short-term selling caps the move

In a post on X (formerly Twitter), crypto analyst Maartun observed an increase in the Short-Term Holder (STH) profit transfers.

In fact, the Bitcoin STH P&L to Exchanges showed 18.7k BTC moved at a profit in the preceding 24 hours.

This represented selling and profit-taking at a key local resistance, hampering the bulls’ ability to drive the rally past $116k. It also underscored weak short-term conviction, which could lead to higher price volatility.

Is Bitcoin undervalued right now?

On the 27th of October, U.S. Spot exchange-traded funds (ETFs) for Bitcoin experienced a modest inflow of $149.3 million. While this amount is relatively small, it indicates that short-term sentiment is not entirely bearish.

However, the market signals can be quite confusing.

There is mid-range resistance, selling pressure from short-term holders, and a decrease in Open Interest over the past 24 hours, all occurring alongside these positive ETF flows.

What should market participants anticipate next?

There is a chance that $113.5k acts as support and boosts Bitcoin higher, but it is unclear how long the price might consolidate around the $116k resistance.

Remember, $117k is also a major supply zone, and liquidation levels were piled up overhead.

What was clear was that Bitcoin was undervalued compared to its ETF flows. In a post on X, crypto analyst Axel Adler Jr explored a price model that used the ETF capital inflows to calculate BTC’s fair value.

At the time of writing, this fair value was $128.4k, while Bitcoin traded at $114.3k, 11% below the model’s predicted price.