4 Reasons Bitcoin (BTC) Price May See Short-Term Correction

TL; DR

Certain parameters on the chain Point out overbought conditions, flash the sell signal on BTC. The fear and greed index is currently in the “extreme greed” zone, which may indicate an environment of high and continued price reduction.

Vehicle signs

Bitcoin (BTC) has been the talk of the town lately. After Donald Trump's victory in the US presidential election last week, it entered a major bull run mode, with the price reaching a high of $92,000 on November 13. However, some important factors Suggest that you can go back from these heights.

The first component we will focus on is the BTC Relative Strength Index (RSI). The technical analysis tool measures the speed and change of price movements, varying from 0 to 100.

A reading above 70 indicates that the asset is overbought and could be headed for a correction. On the other hand, a drop below 30 usually indicates a buying opportunity. as a moment By writing these lines, it is RSI Hovering At around 77, the sell sign is flashing.

Next on the list is the BTC Market Value to Real Value (MVRV), which is as The above mentioned metric helps traders to analyze overbought or oversold conditions. Aigh ratio can to be Price retreat condition, with Currently MVRV Standing Approximately 2.6.

“Historically, values ​​between 2.6 and 5 correspond to market peaks, but each cycle has seen progressively lower peaks,” IntoTheBlock he said..

of It is the third part Network Value to Metcalfe (NVM) Ratio. It evaluates BTC's market capitalization relative to its network activity; Especially Number of active addresses.

will hire Metcalfe's Law, the principle that indicates the value of the network is proportional to the square of the number of users. By applying With this principle, NVM provides insights into whether an asset is overvalued or undervalued. It is the index according to CryptoQuant data. currently the host as if Approximately 1.24, leaning toward a pessimistic view.

Last but not least, we touch on the profitability of the property. Latest data It shows That's what he said. A shocking 99% of all BTC investors are sitting on some paper profit. 0% are in water, but only 1% are damaged.

Although this may sound like good news to those who are caught, it can be. as well A short-term return signal. In October of this year, almost 95% of the supply of BTC was profitable because the price was above 69 thousand dollars. Soon after, however, a major adjustment brought the price down to just under $65.5K in no time.. Similar conditions were observed In September and March.

Bonus: Extreme Greed

Another factor that indicates the decline in the price of bitcoin is the index of fear and greed Recently entered “Extreme greed” region. This development indicates that the sentiment in the market continues to be strong.

However, “excessive greed” is sometimes associated with impulse buying and the effect of fear of never ending up (FOMO). It could be a sign. Point Before pulling back, BTC valuation hit a local high.

After all, one of Warren Buffett's investment tips says that people should be greedy when others are fearful.