Bitcoin Correction Predicted by Analyzing Premiums
Bitcoin prices have experienced a decline of 11.5% since reaching a peak on January 11. This correction was expected, but there are indications that a larger market correction could be on the horizon.
Chances of Bitcoin Correction
Analyzing the Bitcoin Korea Premium Positive and the Coinbase Premium Negative, on-chain analytics provider CryptoQuant has suggested a short-term correction. When the Korea Premium overheats by more than 3% and the Coinbase Premium turns negative, it typically means that US investors are selling and South Korean investors are buying Bitcoin competitively.
Historically, this premium divergence has signaled a short-term correction in a bull market. However, given that we are currently in a recovery or bull rally phase, a short-term correction is more likely.
Increased Signals of Correction
The analysts have observed three consecutive signals of correction since mid-December. The Kimchi premium previously signaled a local market top, and BTC has been unable to break through resistance above $47,000. Additionally, there have been increased deposits into Bitcoin exchanges by whale investors and miners.
Furthermore, there is speculation of another big leverage flush on derivatives exchanges, which could result in a 20-30% correction and push BTC prices below $40,000.
BTC Price Outlook
Currently trading at $42,843, Bitcoin has remained relatively flat since its weekend fall. It briefly moved above $43,000 but was not sustainable. BTC has been experiencing sideways movement since December.
If a correction were to occur, there is solid support around the $37,000 price zone, which would represent a 24% correction.
Hot Take: Bitcoin Correction on the Horizon
Analysts predict that a Bitcoin correction is likely in the near term. Historical premium divergence, increased deposits into exchanges, and the possibility of a leverage flush all suggest that a correction could be imminent. As BTC remains in a sideways pattern, it is important to monitor these indicators and be prepared for potential market movement.
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