Bitcoin price fell 5% over the past 24 hours, trading at $41,645 on December 11. Despite the sharp price correction, technical indicators and on-chain data show that Bitcoin (BTC) is still showing strength as its price struggles to regain its footing. Over $44,000.
Bitcoin price is “overextended,” according to on-chain data.
Bitcoin fell as much as 7.2% to $40,300 on Coinbase, sparking conversation among analysts. Julio Moreno, head of research at on-chain analytics firm CryptoQuant, said the price of the flagship cryptocurrency “has overheated following its recent rise past the psychological level above $40,000.”
Some metrics are flagged #Bitcoin The price has become overheated following a recent rally above $40,000 (red zone).
1. Bull market-bear market cycle indicator: The bull market has overheated for the first time since July.
2. Miner Profit/Loss Sustainability: Block rewards grow much faster… pic.twitter.com/irpVvBSV3G
— Julio Moreno (@jjcmoreno) December 7, 2023
More data from on-chain data analytics firm Lookintobitcoin highlighted bullish fatigue. According to a December 2023 report, Bitcoin price has reached the golden ratio multiplier short-term target highlighted by the Crosby ratio. The Crosby ratio shows Bitcoin’s short-term price at “overextended levels” and needs to be corrected. At least slow down.
The Golden Ratio Multiplier is an indicator that explores Bitcoin’s adoption curve and market cycles to understand how the price may move in the medium to long term.
In other words, Bitcoin has reached an overbought state above $40,000 as buyer fatigue sets in. Bitcoin has been massively overbought since December 5, according to the flagship cryptocurrency’s Relative Strength Index (RSI).
This is an early sign that buying pressure may eventually ease as traders see the rally drying up and potentially decide to book profits.
Bitcoin price faces strong resistance near $44,000.
The ongoing correction in the Bitcoin market is due to the firmness of the barrier around the $44,000 supply zone. The Lookintobitcoin Golden Ratio Multiplier Indicator, which explores the Bitcoin adoption curve and market cycles, currently shows that the 1.6 multiplier target has been reached at around the $44,000 level. BTC has been stuck here for the past week, “clearly not able to overcome it.”
That said, Bitcoin’s price is facing vehement resistance from a supplier-heavy region, making it a difficult obstacle to overcome the upside.
The robustness of the $44,000 barrier is highlighted by on-chain data from IntoTheBlock’s “IOMAP (in/out of the Money around Price)” model (see below). According to the IOMAP chart, this level is in the $43,346 to $44,627 price range, with approximately 585.77 BTC previously purchased by approximately 1.43 million addresses.
Any attempt to raise the price above this level will be met by aggressive selling from a group of sellers hoping to break even.
Related: $300 Million Crypto Buy Liquidated — 5 Things to Know About Bitcoin This Week
Can Bitcoin sustain its upward trend?
However, the ongoing correction could be a bear trap as it could be considered a healthy correction in the broad bullish trend established over the past few months.
Moreover, data from cryptocurrency market intelligence firm Santiment shows that Bitcoin outflows from exchanges are on the rise. According to the chart below, the current BTC exchange flow balance is -347.
The negative numbers show that BTC outflows are overshadowing inflows, meaning investors are more inclined to hold rather than sell, which is a bullish sign.
This suggests that the recent pullback towards $40,000 may be a short-term correction, giving traders more opportunities to buy on the downside before the uptrend continues.
From a technical perspective, Bitcoin maintained its upward trajectory, trading above all major moving averages. In particular, these chart overlay indicators suggested strong support areas for the downtrend.
The moving average convergence divergence indicator (MACD) was still moving above the neutral line in positive territory. The MACD line (blue) is still above the signal line (orange) after crossing above it on October 16th, suggesting that market conditions are still trending upward.
Therefore, the price of BTC is likely to continue rising from current levels, with buyers targeting a break above $44,000. A clear break above this level could see Bitcoin rise and reach the psychological level of $50,000 in the new year or spring 2019, when the U.S. Securities and Exchange Commission is expected to make a decision on applications for a Bitcoin exchange-traded fund. The next Bitcoin halving event will occur in 2024.
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.