Bitcoin price transition to early distribution phase, CryptoQuant analyst warns

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Sholanke Dele

04.02.2025

Bitcoin price transition to early distribution phase, CryptoQuant analyst warns — Bitcoin enters early distribution phase as RSI turns bearish.

Bitcoin price has experienced some extreme volatility in the early days of February, with signs pointing to a potential shift from an accumulation to a distribution phase, which could set the stage for new market dynamics in the coming days.

The month began with Bitcoin dipping to oversold levels near $91,300, followed by a swift 12% recovery. However, this rebound hit a ceiling at the resistance level of $102,700. As of Tuesday, February 4th, Bitcoin has seen a decline of over 3%, trading at around $98,800 during the European session.

BTC price dynamics (November 2024 - February 2025). Source: TradingView.

CryptoQuant analyst Oinonen commented on these developments, suggesting that Bitcoin is now entering what he describes as an «early distribution phase.» This phase typically indicates that price gains might slow down, as the supply begins to shift from long-term holders to newer market participants.

This shift from accumulation to distribution is crucial for investors to understand. During accumulation, seasoned investors or «whales» tend to buy up Bitcoin, expecting future price increases. In contrast, distribution sees these holdings being sold off, often to less informed or newer investors, which can lead to a stabilization or even a cooling of price growth. According to Oinonen, this could mean a few more quarters of growth, driven by retail investor interest and broader market promotion efforts.

Bitcoin RSI enters bearish territory, signaling potential drop below $98,000

Technical indicators offer further insight into Bitcoin's current trajectory. The RSI on both daily and 4-hour charts has entered bearish territory, suggesting that today's decline might extend below $98,000. From a technical standpoint, breaking above $100,000 could see Bitcoin retesting the resistance at $102,700, and potentially, if it surpasses this level, could aim for the record high of $109,390.

Looking ahead, if Bitcoin manages to break through the immediate resistance at $102,700, it might signal continued bullish sentiment, but the current bearish indicators on RSI suggest caution. In addition, the market's transition into what appears to be a distribution phase could either extend the current price correction or set the stage for a new accumulation phase if the market dynamics shift once again.

Long-term Bitcoin holders sold approximately 177,617 BTC over the past weeks. This significant sell-off by long-term investors led to increased market volatility in Bitcoin's price.

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