Bitcoin Price Correction: On-Chain Data Shows Overheating
The price of Bitcoin has dropped by 5% in the last 24 hours, currently trading at $41,645. However, despite this correction, on-chain data and technical indicators suggest that Bitcoin still has strength as bulls attempt to push the price back above $44,000.
Exhaustion Among Bulls: On-Chain Data Analysis
On-chain data analysis firm Lookintobitcoin has highlighted exhaustion among bulls. According to their December 2023 report, the Bitcoin price has reached its golden ratio multiplier near-term target. This indicates that the price is at “over-extended levels” and may need to correct or slow down.
The golden ratio multiplier explores Bitcoin’s adoption curve and market cycles to understand its price behavior in medium to long-term time frames. The recent overbought conditions above $40,000 indicate buyer exhaustion and a potential decrease in buying pressure.
Resistance at $44,000: Tough Hurdle for Bulls
The ongoing correction in the Bitcoin market is due to the stiff resistance around the $44,000 supply zone. The golden ratio multiplier indicator shows that the 1.6 multiplier target has been reached in this area. BTC has been struggling to break above this level convincingly.
On-chain data from IntoTheBlock’s in/out of the money around price (IOMAP) model confirms the stiffness of this barrier. Aggressive selling from sellers who bought around the $43,346 and $44,627 range would likely occur if there are attempts to push the price above this level.
Potential Bear Trap: Healthy Correction in an Extensive Bullish Trend
The ongoing correction could be a bear trap and a healthy correction within a bullish trend established over the past few months. Bitcoin’s exchange outflows are increasing, indicating that investors are more inclined to hold rather than sell.
From a technical standpoint, Bitcoin price is trading above major moving averages, indicating strong support on the downside. The moving average convergence divergence indicator (MACD) also suggests favorable market conditions for the upside.
Hot Take: Bitcoin Price Outlook
The current correction in Bitcoin price may present a buying opportunity for traders. The upward trend is expected to continue, with buyers targeting a break above $44,000. A clear breakout above this level could potentially lead to a rise towards the $50,000 psychological level.
The decision on spot Bitcoin exchange-traded fund applications by the United States Securities and Exchange Commission and the next Bitcoin-halving event in spring 2024 may further impact Bitcoin’s price in the coming year.
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