Bitcoin price continues to sell, but data highlights need a healthy correction
The price of Bitcoin (BTC) fell 5% in the last 24 hours to trade at $41,645 on December 11th. Despite the price correction, technical indicators and on-chain data show that Bitcoin is still showing strength as bulls try to push the price back. Over $44,000.
On-chain data shows Bitcoin price “overextended”.
Bitcoin fell as much as 7.2%, falling to $40,300 on Coinbase, sparking chatter among analysts. Julio Moreno, head of research in the on-chain analysis company Cryptoquant said the price of the main cryptocurrency “after the heat over the recent rally” $ 40,000 psychological level.
#Bitcoin price is overheating after a recent rally above $40k (red areas) on some metrics.
1. Bull-Bear Market Cycle Indicator: First Over-Bull Level Since July.
2. Mining Profit/Loss Sustainability: Block reward from… pic.twitter.com/irpVvBSV3G
— Julio Moreno (@jjcmoreno) December 7,
Additional data from on-chain data analysis firm Lookintobitcoin highlighted fatigue among the bulls. According to the December 2023 report, the price of Bitcoin's golden ratio multiple has recently reached its target, highlighted by the Crosby ratio, which indicates the need for a correction or at least a slowdown in Bitcoin's recent price at an “overextended level”.
The Golden Ratio Multiple is an indicator that analyzes Bitcoin's adoption curve and market cycles to understand how the price will behave in medium and long-term time frames.
In other words, the price of Bitcoin reached an overbought position above $40,000 as buyer fatigue set in. Note that the relative strength index (RSI) of the flagship cryptocurrency is Since December 5, the price has been heavily overbought.
As traders run out of steam and opt to book profits, this is the first sign that the buying pressure may finally subside.
Bitcoin price will face strong resistance around $44,000
The next correction in the Bitcoin market is due to the tightness around the $44,000 supply zone. The Lookintobitcoin gold ratio indicator, which tracks Bitcoin's adoption curve and market cycles, shows that the 1.6 multiplier target is now at around $44,000. Note that BTC has been stuck here for the past week “failing to break out more convincingly”.
In other words, the price of Bitcoin is facing a major rejection from this supply congestion area, which makes it a tough hurdle for the bulls to jump over.
The level of stubbornness at $44,000 is highlighted by data from the IOMAP model (shown below) surrounding the IntoTheBlock coin on-chain. According to the IOMAP chart, this level is the price range between $43,346 and $44,627, with approximately 585.77 BTC already bought by 1.43 million addresses.
Any attempts to push the price above this level will be met with aggressive selling from this set of sellers who want to dissolve.
Related: $300M crypto long liquidity – 5 things to know in Bitcoin this week
Can Bitcoin Sustain Growth?
A continued correction could be a bear trap as it could be considered a healthy correction in the broader bullish trend that has formed over the past few months.
Moreover, data from crypto market intelligence firm Sentiment shows that Bitcoin foreign exchange flows are increasing. According to the table below, the BTC exchange flow balance now stands at -347.
The negative reading indicates a reversal of BTC flows, which suggests that investors are more interested in holding than selling, which is a bearish sign.
This suggests that the recent correction towards $40,000 may be a short-term correction, giving traders an opportunity to buy more on the dip before continuing the uptrend.
From a technical perspective, Bitcoin price traded above major moving averages, maintaining their upward trend. In particular, these chart overlay indicators have provided strong support positions on the downside.
The moving average converging divergence indicator (MACD) was still moving above the neutral line in positive territory. The MACD line (blue) is still sitting above the signal line (orange) after crossing above on October 16, indicating that market conditions are still bullish.
Therefore, the price of BTC is bound to rise from the current level. Note that a clear break above this level could lead to Bitcoin rising to designate the psychological level of $50,000 in the new year, when the United States Securities and Exchange Commission is expected to make a decision on the application of Bitcoin exchange-traded funds before it or in the spring of 2024. -When even half happens.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
