While bitcoin’s rally to $68,500 may have been a peak, several indicators look to signal a quick correction. Bitcoin has seen little price increase over the past 24 hours, with many worried that we have reached both our local top and a heavy support point in the process.
During Bitcoin’s Q1 rally, the aggregated spot cumulative volume delta (CVD)—a key metric that follows the retail investor buying pressure—shot up. But while the CVD has been on a slight bullish angle during this current horde phase, retail investors are selling as they’ve done when they are buying on higher prices.
Bitcoin In Decision Phase
“It is currently going through a decision phase within which there is demand that need to be heightened to sustain momentum higher”, analyst XBTManager has said noted of Bitcoin, which has reached a resistance level. Without this, we can see Bitcoin potentially falling to a demand zone of $63,000 to $64,000.
CryptoQuant CEO Ki Young Ju highlighted another risk factor: Across all exchanges, the leverage ratio for BTC futures and derivatives all time high. That means the market is overleveraged, and can be expected to get more volatile.
While shorting rallies is not a new phenomenon, crypto researcher Axel Adler Jr says that overleveraged conditions abound in bullish markets but can also set the stage for a violent price correction in either direction.
But historical data shows that BTC has failed to break above any resistance levels, forming higher lows while giving bearish divergence on the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators. Previously, price drops of 25% to 30% have followed this divergence, and BTC could consequently fall to $52,000-$50,000.
While the bearish outlook might still hold if the RSI or MACD creates a new low, a new high for the pair could invalidate it and can signal the start of the renewed bullish momentum in BTC.
