Bitcoin is pushing into fresh highs while its market “heat” stays merely warm—a rare mix that has historically allowed trends to grind higher before sentiment overheats. But there’s a catch: long-term holders (LTHs) are beginning to take profits as unrealized gains approach the critical ~300% zone that has sparked distribution in past cycles. That tug-of-war between continued upside and profit-taking supply could define the next leg.

What’s Driving the “Warm” Readings?

Bitcoin’s Price Temperature (BPT) remains moderate even as BTC trades well above its four-year moving average. According to on-chain analysis referenced by CryptoQuant’s Axel Adler Jr., this signals constructive momentum without the blow-off conditions typical of cycle tops. At the same time, early signs of LTH distribution are emerging—consistent with late-stage but not final phases of previous bull advances.

As reported, BTC sits around $121,851 with market dominance near 58% and 90-day gains at ~17%, underscoring resilient trend strength despite pockets of cooling.

Why It Matters to Traders

A warm BPT suggests the market has room to run before froth becomes extreme. However, when LTH unrealized gains push past ~300%, selling historically accelerates, adding overhead supply and increasing the probability of sharp, liquidity-seeking pullbacks. The likely outcome in the near term: higher highs punctuated by deeper, faster dips—ideal for prepared traders, punishing for late chasers.

Historical Trigger: The 300% Profit Threshold

Adler notes LTHs tend to sell when unrealized profits exceed ~300%, a pattern that has repeated across multiple Bitcoin cycles. During the March 2024 rally to $72,754, LTH profit-taking increased as that threshold was approached, leading to meaningful—but tradable—volatility. Expect a similar behavior profile if profits again test this zone.

Actionable Setups to Consider

• Buy the warm, sell the hot: Build positions on pullbacks while BPT is moderate; scale out as temperature and euphoria rise.
• Track LTH distribution: Watch for rising exchange inflows from older coins and elevated spent coin age—signals of supply hitting the market.
• Trade the dips, not the spikes: Use limit buys at prior breakout retests or near rising MAs; avoid FOMO entries on vertical candles.
• Manage leverage: Keep position size modest and deploy trailing stops under higher lows to avoid getting trapped in whipsaws.
• Hedge tactically: Pair core longs with protective puts or reduce delta into overheated bounces.

Key Levels and Data to Watch

• Four-year MA: A moving floor in trending phases; sustained loss would signal regime change.
• Prior ATH breaks and retests: Expect volatility around these zones; they often become high-liquidity pivot levels.
• Funding and open interest: Spiking leverage amplifies reversal risk; watch for crowded longs.
• BTC dominance (58–60%): Rising dominance favors BTC over alts; a roll-over may hint at rotation risk.
• Macro/regulatory catalysts: Headlines on ETFs, policy, or liquidity can tilt the balance when LTH supply builds.

Bottom Line

The trend is up, the temperature is warm, and LTHs are quietly selling into strength. That combination rewards disciplined dip buyers and penalizes late momentum entries. Respect the 300% profit threshold as a risk gauge, plan entries on weakness, and scale risk as conditions heat up.

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