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Bitcoin’s Market Evolution Amidst Federal Reserve’s Rate Decision
Bitcoin’s market is at a significant turning point following the Federal Reserve’s recent 25 basis points interest rate reduction. This pivotal decision has introduced a new chapter in market dynamics. Since the announcement, Bitcoin has entered a consolidation phase, maintaining a steady price level as investors assess the potential for further upward movement. Though short-term volatility persists, market sentiment is generally optimistic, with traders anticipating a potential breakout that could drive Bitcoin closer to its previous all-time highs.
Renowned analyst Axel Adler has identified a crucial structural shift within the market. Adler notes an encouraging divergence where Bitcoin’s price is on the rise while Long-Term Risk is declining. This unusual but positive development is attributed to the increasing Long-Term Holder (LTH) Realized Price, fueled by newer, costlier Short-Term Holder (STH) coins transitioning into the long-term category. Effectively, this means that the higher-cost new coins are balancing out the older, less expensive ones, leading to what Adler describes as a “healthy LTH profit reset.” This dynamic mitigates overheating risks, reinforcing the market’s robust structure and supporting ongoing trend continuation. Despite some analysts’ cautious stance, the long-term perspective remains optimistic, paving the way for decisive movements in the upcoming weeks.
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Long-Term Risk Dynamics Indicate a Robust Bitcoin Cycle
According to Axel Adler, Bitcoin’s Long-Term Risk has been steadily decreasing since March, signaling a constructive transformation in market structure. The primary catalyst for this decline is the accelerated rise of the Long-Term Holder (LTH) Realized Price compared to the spot price. This divergence generates a bullish indicator, suggesting improvements in Bitcoin’s underlying health even as the price consolidates.
The mechanics behind this trend involve the maturation of coins purchased during higher valuation periods in spring and summer. As these coins cross the six-month threshold, they officially join the LTH cohort. These newer coins possess a higher cost basis, elevating the LTH Realized Price more rapidly than the spot price itself. Consequently, the LTH MVRV ratio (a measure of unrealized profits) remains stable, and normalized Long-Term Risk declines despite rising prices.
Simultaneously, older, cheaper coins are being distributed out of the LTH pool, making room for the newer, more expensive ones. This rotation compresses the LTH profit multiple without necessitating a decline in spot price. The result is a powerful effect: with each new all-time high, Long-Term Risk increases only slightly while fresh demand from Short-Term Holders (STH) absorbs the supply from LTH. This process fosters a bullish divergence where price trends upwards but risk is contained. Adler emphasizes that this structure allows the cycle to extend further, enabling Bitcoin to ascend towards new highs without the typical overheating conditions seen in previous peaks. Essentially, Bitcoin’s long-term foundation remains robust, and the market could sustain a prolonged bullish phase driven by fresh capital inflows and healthier profit distribution dynamics.
Approaching Resistance Levels Before a Potential Breakout
Currently, Bitcoin (BTC) is trading around $116,781, with price action consolidating just below a significant resistance level at $123,217. This level has consistently acted as a formidable barrier in recent months, making it a critical threshold for bullish traders to break through to confirm a new upward movement.
The recent rebound from the $112,000–113,000 zone, supported by the 100-day Simple Moving Average (SMA), indicates renewed buying interest after a period of weakness. The 50-day SMA has also started to trend upwards, aligning closely with the spot price and signaling improved short-term momentum. Meanwhile, the 200-day SMA, positioned comfortably below at approximately $103,200, reaffirms Bitcoin’s broader bullish trend.
At present, BTC is navigating within a constructive setup: higher lows have formed since early September, indicating that buyers are gradually regaining control. However, without a decisive breakout above the $117,500–118,000 range, the price may remain range-bound before attempting to retest the $123K resistance level.
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