Bitcoin’s major warning signal lights up again – Time to take profits?

Key Takeaways

Why are traders watching Bitcoin’s Smart Model?

It just crossed $60K, historically signaling Bitcoin’s approach to a cycle top near $69K.

What does on-chain data reveal?

Futures Taker CVD shows bearish dominance, while UTXOs in Loss suggest rising profit-taking pressure.

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Bitcoin [BTC] witnessed a major price catalyst this week, climbing to a new all-time high as institutional inflows surged to $3.2 billion over the past week.

Despite strong momentum, BTC held near $123,000 at press time. The price action leaves room for a potential correction, much like the previous pullback after crossing $124,000.

This cautious outlook appears justified, as AMBCrypto’s analysis shows that certain investor activities are beginning to align with expectations of a possible market decline.

‘Max Model’ warns of a near-term peak

The Max Intersect SMA Model, often used to identify Bitcoin’s market-cycle peaks, indicated that bearish momentum could soon emerge.

According to Alphafractal data, the Smart Model (blue line) crossed $60,140, its highest reading of this cycle.

Joao Wedson, founder of Alphafractal, noted on X that once this metric touches $69,000, it typically flashes a sell signal marking a cycle top.

This alignment historically preceded major tops in 2017 and 2021. The model currently projects the theoretical price ceiling near $138,000, with BTC already testing the $123,000–$125,000 zone.

Amid these developments, AMBCrypto’s analysis found that traders appear to be rotating toward defensive positioning despite ongoing inflows.

Investors begin wagering on Bitcoin’s decline

One of the clearest signs that traders are positioning for a potential drop in price is the Futures Taker CVD (Cumulative Volume Delta).

This metric measures the disparity between buy and sell volumes in the futures market to determine the prevailing sentiment likely to influence price movement.

At the time of writing, the Taker CVD indicated that bears were in control, as seller volume exceeded buyer volume across exchanges.

Rising sell volume signals mounting sell pressure, which could weaken Bitcoin’s ongoing bullish momentum.

Similarly, the NVT Ratio, which compares network activity to price, held steady at 31. The reading remains neutral, showing no clear overvaluation or undervaluation.

This means Bitcoin could still move sharply in either direction, depending on near-term momentum.

Drop in loss could trigger selling pressure

Data from CryptoQuant showed that the Unspent Transaction Output (UTXO) in Loss dropped sharply in the past day, trending at a low of 457 at press time.

This indicated that the number of Bitcoin holders in loss has significantly decreased. With fewer investors holding losing positions, there’s a stronger likelihood that many will take profits and sell, adding to market supply.

If Bitcoin experiences a further upsurge in the coming days, these profit-taking activities could trigger a wave of sell-offs, potentially marking the start of a corrective phase.