Should Bitcoin Holders Prepare for a Correction?
98% in the Green. At $12,000, as of April 2013 bitcoin has been profitable on 97.6% of all days. There are now very few people holding BTC at a loss. According to analytics group, Glassnode, only 2.4% of UTXOs were created when BTC was higher than $12,000.
“Extended periods at this level and above are characteristic of bull runs as BTC moves toward new all-time highs (at which point the metric reaches 100%),”
This month gave holders a 30% return, despite the recent pull-back. Cointelegraph claims that retracement for gold and stocks appeared to fuel selling pressure, but fundamentals remain stronger than ever.
Although the upwards trend can indicate that we’re in the early phases of entering a bull market, investors must be weary of a correction.
$12k Breakout Fails.
According to the Singapore-based QCP Capital, bitcoin is showing signs of ‘lethargy’ as it fails to break $12,000. This can be seen in the daily chart provided by trading view.
We saw bitcoin jump above $12,400 on Monday but the breakout failed to gain momentum. Slowing of price increase coupled with weak buying pressure typically results in bearish setup.
“Bitcoin may have a tough time establishing a foothold above $12,500 in the near term, as bullish positioning in the market is starting to look overstretched”
Record high interest for bitcoin futures has lead to a bloated bullish positioning. These types of positions lead to price pullbacks, especially if technical indicators signal signs of the asset being overbought. The relative strength index(RSI) measures whether an asset has been over bought or over sold. Bitcoin’s weekly chart RSI has crossed 70, signaling a correction in the near future.
In the short-term $11,600–$11,700 are key prices to watch. Failing that support level can retest $11,000. QCP Capital believes that in the broader outlook markets will remain bullish as long as $10,500 support prevents prices from further falling.
Can Price Dip Below $10k?
The bearish scenario is a failed attempt to keep prices above the $10,500 price level. Market trends can be spotted in the futures market. The ultimate low for this correction appears to be the open CME (futures) gap at $9,700. If that gap is filled, the sentiment and momentum will most likely hit a quarterly low. This would cause prices to hover near that price range.
Exchange OKEx provided on-chain data showing that traders are treating $10,000 level as a strong area of support. Many traders closed their old positions from $6,200 to $9,700 and then bought back in at $10,000.
Researchers at Santiment, an on-chain analysis firm have said:
“Alts will enjoy the party, one by one, crazy money will move from one to another, there are still some alts to pump (though their number is getting less and less). […] After process is over either we all together go down, or Bitcoin will go up alone.”
This supports the claim that altcoins will continue to gain momentum and keep bitcoin in stable price levels. Medium- to long-term, on-chain analysis and the trend of altcoins suggest that the $10,000 support level of Bitcoin could hold. Another accumulation phase above $12,000 key level could catalyze another BTC rally in the final quarter of 2020.