Bitcoin (B T c) The price is trading at $41,645 on Dec 11, down 5% in the last 24 hours. Despite the sharp price correction, technical indicators and on-chain data suggest that Bitcoin is still displaying strength as bulls attempt to push the price back above $44,000.
On-chain data shows Bitcoin price “over-extended”
Bitcoin fell 7.2% to $40,300 on Coinbase, sparking talks among analysts. Julio Moreno, head of research at on-chain analytics firm CryptoQuant, said the price of the leading cryptocurrency is moving much higher following its recent rally above the psychological level of $40,000.
Some metrics are flagging #bitcoin The price is moving higher after a recent rally above $40K (red area).
1. Bullish-Bearish Market Cycle Indicator: Extremely bullish phase for the first time since July.
2. Miner Profit/Loss Stability: The block reward is increasing very fast… pic.twitter.com/irpVvBSV3G
– Julio Moreno (@jjcmoreno) 7 December 2023
More data from on-chain data analysis firm LookIntoBitcoin highlighted exhaustion among bulls. according to this December 2023 reportBitcoin’s price has reached its near-term target of the golden ratio multiplier, highlighted by the Crosby ratio, which shows Bitcoin’s near-term price at “highly extended levels” resulting in a correction or at least Requires less slowing down.
The Golden Ratio Multiplier is an indicator that tracks Bitcoin’s adoption curve and market cycles to understand how the price may behave in the medium to long-term time frame.
In other words, buyer exhaustion caused Bitcoin price to reach overbought conditions above $40,000. Note that the Relative Strength Index (RSI) of the major cryptocurrencies shows that the price has been largely overbought since December 5th.
This is an early sign that the buying pressure may finally be easing as traders saw the rally running out of momentum and potentially opted to book profits.
Bitcoin price faces stiff resistance around $44,000
The ongoing correction in the Bitcoin market is due to the hardening of the barrier around the $44,000 supply zone. The LookIntoBitcoin Golden Ratio multiplier indicator, which explores Bitcoin’s adoption curve and market cycles, shows that the 1.6 multiplier target has now been reached around the $44,000 area. Note that BTC has been stuck here “unable to break out” for the past week.
In other words, Bitcoin price is facing fierce rejection from this supplier congestion zone, making it a tough hurdle for bulls to jump.
The hardness of the barrier at $44,000 is increased by on-chain data From IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model (shown below). According to IOMAP charts, this level lies between the $43,346 and $44,627 price range, where approximately 585.77 BTC were previously purchased by approximately 1.43 million addresses.
Any attempt to push the price above this level will be met by aggressive selling from this group of sellers, who may wish to break out of balance.
Can Bitcoin maintain its bullish trend?
Additionally, data from crypto market intelligence firm Santiment has shown that exchange outflows of Bitcoin are increasing. According to the chart below, the BTC exchange flow balance is now at -347.
The negative reading shows that BTC outflows are eclipsing inflows, which suggests investors are willing to hold rather than sell, which is a bullish sign.
This suggests that the latest drop towards $40,000 could be a short-term correction, giving traders an opportunity to buy more on dips before the uptrend continues.
From a technical perspective, Bitcoin price traded above all major moving averages, which have maintained their upward trajectory. Notably, these chart overlay indicators present areas of strong support on the downside.
The moving average convergence divergence indicator (MACD) was still moving above the neutral line in the positive zone. The MACD line (blue) was still located above the signal line (orange) after crossing it on October 16, showing that market conditions are still in favor of the bulls.
Therefore, the price of BTC will continue to rise from the current levels and buyers will aim for a break above $44,000. Note that a clear breakout above this level could boost Bitcoin to tag the psychological level of $50,000 in the new year, when or before the United States Securities and Exchange Commission spots its Bitcoin exchange-traded fund applications. A decision is expected. spring of 2024 when next bitcoin halving Even it happens.
This article does not constitute investment advice or recommendations. Every investing and trading move involves risk, and readers should do their own research when making decisions.