Bitcoin Price Nears $74,000 But It May Be Overheated — Will BTC Cool Off?

Key Takeaways

• Bitcoin nears $74,000, signaling possible market overextension.
• On-chain indicators hint at potential forthcoming correction.
• Patterns suggest current Bitcoin rally nearing completion.

Bitcoin’s latest uptrend saw it reach nearly $74,000. However, certain indicators suggest the market is overextending. Is Bitcoin (BTC) ready for a more significant correction or will this uptrend persist through April’s halving? 

Bitcoin On-chain Indicators

As shared in the CryptoQuant  Telegram channel, the following indicators paint a bearish picture.

Market Cycle Dynamics: The Bull-Bear Market Cycle Indicator now places the market in an overheated-bull phase, especially after Bitcoin’s price leap over $65K. Such phases typically lead to corrections.

Historically speaking, we can see that these periods can last for much longer before turning into a bear market cycle. However, it is still a sign that urges caution.

Miner Earnings Peak: Miner profitability is at its highest since December 2023, a plus for miners but historically a precursor to market shifts.

With the upcoming halving should change, and before the dust settles, miners could provide sellers pressure to cover the cost until the equilibrium is met between the price and the supply change.

Trader Profit Margins: Traders are seeing unrealized profit margins of 57%, which has signaled impending corrections in the past.

Short-term Holder Sales: The recent spike in sell-offs by short-term holders, chasing profits not seen since February 2021, may increase market sell pressure.

Recently, we saw an unprecedented case of all Bitcoin addresses being profitable. When the market reaches this exuberance, corrections usually follow.

Although other on-chain metrics suggest investors keep accumulating, these provide some signs of caution. 

Bitcoin (BTC) Price Analysis 

Bitcoin achieved a new all-time high of $73,700 on March 13, 2024, and maintains its upward momentum. A review of its price movement since late January reveals a five-wave pattern, hinting that the current rally may be nearing completion. On March 5, Bitcoin experienced a 14% drop while trying to break past $70,000.

From February 26, its last upward movement, we saw the formation of an ascending triangle whose resistance the price interacted with today. This triangle could be interpreted as an ending diagonal or a rising wedge. These patterns suggest that the uptrend is near completion, hinting at a potential downturn. 

Should Bitcoin face rejection at this threshold, leading to another notable decline, it could herald the beginning of a more significant bearish phase. Conversely, a breakthrough beyond this resistance might set Bitcoin’s sights on reaching $80,000.

Disclaimers

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

About the Author

Nikola Lazic

Nikola Lazic is a cryptocurrency analyst and investor working in the industry since 2017. He holds a bachelor's degree in Sociology, which enables him to better understand the psychology behind the crowd´s positioning. Consequently his preferred analytical tool is Elliott Wave Theory in combination with price action analysis. Combining his experience in trading and investing with knowledge in content writing he strives to bring the most accurate and actionable information. Expertise: Cryptocurrencies, Technical analysis, Elliott Wave Theory, On-chain metrics, Research reports.

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