Bitcoin’s price has seen bullish momentum, with many anticipating a surge to $100,000. However, on-chain metrics and market sentiment suggest that the cryptocurrency could face a significant 10-15% correction before reaching that milestone. Analysts point to several indicators, signaling that a pullback below $80,000 is possible before the next major rally.
Here are five reasons Bitcoin could face a steep correction:
Extreme Greed in Market Sentiment The Bitcoin Fear and Greed Index currently stands at 83/100, signaling “extreme greed” in the market. This heightened investor enthusiasm, often seen at the peak of rallies, can lead to a sharp correction as overexuberant retail investors begin to take profits.
Profit-Taking by Investors A surge in profit-taking is evident, with Bitcoin investors realizing $5.42 billion in profits during the recent rally. This has caused the sell-side risk ratio to rise to 0.524%, signaling increased selling pressure that could lead to heightened market volatility and a possible dip in prices.
TD Sequential Indicator Flashing Sell Signal The TD Sequential indicator, a popular technical analysis tool, is currently flashing a sell signal on the daily Bitcoin chart. If Bitcoin fails to close above $91,900, this signal could trigger a downward correction, postponing a potential rally toward $100K.
RSI Shows Overbought Conditions Bitcoin’s Relative Strength Index (RSI) has surged past the 70 mark, indicating overbought conditions. The RSI, which measures market momentum, suggests that the current price may be too high, increasing the likelihood of a price correction in the near term.
Bitcoin Miner Sell-Off Bitcoin miners have begun to sell off their holdings following the recent price run-up, which could put additional downward pressure on the market. Miners’ sell-offs, coupled with lower-than-expected revenues for mining companies, suggest that bearish sentiment may increase in the short term.
Key Support Levels to Watch
Crypto analyst Ali Martinez has identified key support zones that could help cushion the correction. The first major support range lies between $85,800 and $83,250, while a secondary support zone is between $75,520 and $72,880. These levels represent areas where significant buying interest has been observed, and a bounce off these levels could pave the way for the next rally.
As of now, Bitcoin is trading around $91,160, and the market is in a tug-of-war between bulls and bears. Investors should watch these critical support zones closely to gauge the potential for a deeper correction or a rebound toward $100K.
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