The price of bitcoin (btc) is down 5% in the last 24 hours to trade at $41,645 on December 11. Despite the sharp price correction, technical indicators and on-chain data show that bitcoin is still showing strength as bulls strive to push the price back. above $44,000.
On-Chain Data Shows bitcoin Price 'Overextended'
bitcoin fell as much as 7.2% to $40,300 on Coinbase, sparking a conversation among analysts. Julio Moreno, head of research at on-chain analytics firm Cryptoquant, said the price of the flagship cryptocurrency was “overheating after the recent rally above” the $40,000 psychological level.
Some metrics are failing bitcoin?src=hash&ref_src=twsrc%5Etfw”>#bitcoin The price is overheating after the recent rally above $40,000 (red areas).
1. The Bull-Bear Market Cycle Indicator: Overheated bull phase for the first time since July.
2. The sustainability of miners' profits and losses: the block reward grows much faster than… pic.twitter.com/irpVvBSV3G
— Julio Moreno (@jjcmoreno) December 7, 2023
More data from on-chain data analytics firm Lookintobitcoin highlighted exhaustion among bulls. According to your December 2023 Reportbitcoin price has reached its short-term golden ratio multiplier target, highlighted by the Crosby Index, which shows the short-term bitcoin price at “overextended levels,” resulting in the need to correct, or at less decelerate.
The golden ratio multiplier is an indicator that explores the bitcoin adoption curve and market cycles to understand how the price may behave over medium to long-term time frames.
In other words, bitcoin price reached overbought conditions above $40,000 as buyer exhaustion began. Note that the flagship cryptocurrency's Relative Strength Index (RSI) showed that the price has been massively overbought since December 5.
This is an early sign that buying pressure could eventually ease as traders saw the rally running out of steam and potentially opted to book profits.
bitcoin Price Faces Strong Resistance Around $44,000
The ongoing correction in the bitcoin market is due to the tightness of the barrier around the $44,000 supply zone. The Lookintobitcoin Golden Ratio Multiplier Indicator, which explores the bitcoin adoption curve and market cycles, shows that the multiplier target of 1.6 has now been reached around the $44,000 area. Note that btc has been stuck here for the past week “unable to break out convincingly.”
In other words, bitcoin price is facing fierce rejection from this supplier congestion zone, making it a difficult hurdle for bulls to overcome.
The rigidity of the $44,000 barrier is accentuated by the chain btc/deep-dive?group=financials&chart=inAndOut” target=”_blank” rel=”noopener nofollow”>data from IntoTheBlock's Input/Output Money Around Price (IOMAP) model (shown below). According to the IOMAP chart, this level lies between the price range of $43,346 and $44,627, where approximately 585.77 btc were previously purchased by approximately 1.43 million addresses.
Any attempt to push the price above this level would be met with aggressive selling by this cohort of sellers who may wish to break even.
Related: $300M Long crypto Liquidations: 5 Things to Know About bitcoin This Week
Can bitcoin sustain the bullish trend?
However, the ongoing correction could be a bear trap as it can be considered a healthy correction in an extensive uptrend established over the past few months.
Additionally, data from crypto market intelligence firm Santiment showed that bitcoin currency outflows were increasing. According to the chart below, the btc exchange flow balance is now -347.
The negative reading shows that btc outflows eclipse inflows, suggesting that investors are more inclined to hold than sell, which is a bullish sign.
This suggests that the latest drop towards $40,000 could be a short-term correction giving traders the opportunity to buy more on the dip before continuing the uptrend.
From a technical point of view, bitcoin price traded above all major moving averages, which maintained its upward trajectory. In particular, these chart overlay indicators presented areas of strong bearish support.
The moving average convergence and divergence (MACD) indicator was still moving above the neutral line in the positive region. The MACD line (blue) was still positioned above the signal line (orange) after crossing it on October 16, suggesting that market conditions were still favoring the upside.
Therefore, btc price is likely to continue rising from current levels and buyers are targeting a breakout above $44,000. Note that a clear break above this level could see bitcoin rise towards the psychological level of $50,000 heading into the New Year, when the United States Securities and Exchange Commission is expected to make a decision on the applications for bitcoin exchange-traded funds before or in the future. spring 2024, when the next bitcoin halving occurs.
This article does not contain investment advice or recommendations. Every investment and trading move involves risks, and readers should conduct their own research when making a decision.
