Bitcoin (BTC) price has been slowly falling over the past 24 hours, raising the possibility that the asset may have peaked at $68,500.
Let’s take a look at the factors that explain why Bitcoin’s recent high may be a regional high.
Bitcoin spot CVD remains negative.
During the first quarter rally, Bitcoin hit new all-time highs, and BTC’s total spot cumulative volume delta (CVD) was one of the indicators that continued to increase during the period. This indicator highlights buying pressure from retail investors on exchanges such as Binance, Coinbase, OKX, and Bybit.
Currently, total spot CVD is trending downward during this bullish period. This means that retail continues to sell at a higher price range.
Bitcoin spot CVD aggregated open interest and price charts. Source: TradingView
On-chain analyst XBTManager shed light on the ongoing spot selling and noted that Bitcoin is currently facing resistance that would require it to move into the “decision phase.”
The analyst added that demand from exchanges must increase for the upward momentum to continue. However, there are now more signs of weakness, which means the price could be pushed back into the demand zone around $63,000-$64,000.
The Bitcoin-USDT futures market is heavily leveraged.
According to CryptoQuant CEO Joo Ki-young, BTC estimated futures leverage ratios for the USDt (USDT) pair are currently at an all-time high across all exchanges.
Bitcoin estimated futures leverage ratio. Source: CryptoQuant
This means that the entire cryptocurrency derivatives market is currently overleveraged, including USDT pairs with Ether (ETH) and Tron (TRX), as well as Bitcoin futures or perpetual futures.
It is important to note that long, overly leveraged futures are common in bullish environments. Cryptocurrency researcher Axel Adler Jr believes in volatility swings that can occur in either direction. Adler Jr. said:
“Currently, the leverage size of the top three exchanges is 32%. A rise of more than 55% could lead to chain liquidations.”
relevant: Is number 4 the charm? Bitcoin tagged $68,000 to break a 217-day downtrend.
Bitcoin indicator shows third bearish divergence.
Cointelegraph previously reported that Bitcoin’s six-and-a-half-month downtrend had broken down, forming a series of higher lows. After each higher low, an attempt to break the resistance trend line failed and there is precedent for another correction on the 12-hour chart.
As you can see from the chart, Bitcoin has shown bearish divergence in both the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) lines each time it has made higher lows and tested a descending trend line.
Bitcoin 12-hour chart. Source: TradingView
These bearish differentials have historically resulted in price declines of 25% and 30%. A 25% decline from current prices would retest the $52,000-$50,000 range.
If RSI, MACD or both indicators form new highs relative to previous highs, a major void will form and this will be positive for BTC.
relevant: Why are Bitcoin traders worried about the ‘painful’ BTC price drop?
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.