The price of Bitcoin has finally corrected after weeks of aggressive rally. It has recently fallen by around 10%, leaving market participants wondering whether a deeper fall is to be expected.
Technical analysis
By TradingRage
The daily chart
Looking at the daily chart, we can see that the price has been rising over the past few months, consistently making higher highs and lows. However, the $75,000 resistance level prevented Bitcoin from declining lower and the market is currently falling below the $68,000 support level. However, there is still significant support around the $60,000 level to prevent a crash.
Meanwhile, the Relative Strength Index has shown a significant bearish divergence recently, suggesting that the market is likely to undergo an extended correction phase.
Source: TradingView
The 4 hour chart
On the 4-hour chart, the price action looks much clearer. The market has made a high below the $75,000 level and is currently testing the $68,000 support zone.
A bearish breakout is likely to result in a further decline towards the $60,000 level in the short term. The RSI with values below 50% confirms that the momentum has now turned into a downtrend and a further decline appears likely.
Source: TradingView
On-chain analysis
By TradingRage
Bitcoin STH SOPR
While Bitcoin's price has finally shown some willingness to decline after hitting a new all-time high, it might be helpful to analyze the network's underlying fundamentals to figure out why.
This chart shows the Bitcoin Short-Term Holder Spent Output Profit Ratio. The STH SOPR calculates the profit realization ratio of holders who have held their coins for less than 155 days. Values above one indicate the realization of profits, while values below one indicate the realization of losses.
As the chart shows, STH SOPR has reached a new record high, suggesting that short-term holders have aggressively realized their profits. Still, their selling pressure has definitely contributed to the recent price decline. Until this selling behavior continues, the price may fall even further in the coming weeks.
Source: CryptoQuant
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Cryptocurrency charts from TradingView.
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