The weekly chart of Bitcoin prices shows a clear strong upward trend, which is relatively easy to understand. However, on chain indicators suggest that there may be peaks or potential corrections
The weekly chart of Bitcoin prices shows a clear strong upward trend, which is relatively easy to understand. However, on chain indicators suggest that there may be peaks or potential corrections. Only time can prove whether this correction will lead to another higher low or trend collapse signal.
The price of Bitcoin (BTC) has maintained an upward trend since the beginning of 2023. Although the bullish momentum weakened in September, it is now back on track. Although Bitcoin may continue to rise, it will depend on favorable factors in the market, which may be related to ETF approval, but may not. On the contrary, the recent rebound may seem strong, but it may also trigger a round of adjustment.
The challenge for Bitcoin prices is that due to the continuous creation of higher highs and lower lows, the upward trend in prices in 2023 remains strong. Despite the poor performance of BTC bulls in September and setting a lower high on the weekly chart, the bullish momentum subsequently surged and created another higher high this week.
Although the technical side may seem positive, investors need to remain cautious as this rise was triggered by the spot ETF codes listed by BlackRock on the DTCC website. Further reports indicate that this information has been present on the website since August, which may have weakened the significance of recent gains and may also trigger profit taking by short-term investors.
No matter how the market develops, the Relative Strength Index (RSI) hovers around the overbought level of 70. The last time this happened was in early April, when Bitcoin prices hit a higher peak and immediately experienced a pullback, creating a low point for the subsequent bull market rebound. Therefore, if a similar situation occurs, Bitcoin will be in the correct position for adjustment.
The upcoming pullback may bring the BTC price back to $30000, but in any case, it should not exceed the last critical high of $25836. As long as Bitcoin prices remain above this level, the bull market rebound will remain strong.
On the contrary, if Bitcoin prices continue to rise without a correction, whether due to technological improvements or ETF approval news, Bitcoin may continue to rise. In this case, BTC will first retest the key level of $36294. Overcoming this obstacle may result in the main cryptocurrency reaching a psychological level of $40000.
Since the beginning of 2023, Bitcoin prices have shown an overall bullish trend. Although Bitcoin holders have had doubts about this trend at some times, the current situation is definitely no longer bullish. However, on chain indicators indicate that investors should remain cautious.
On chain indicators issue warnings compared to special coin holders. Santiment's Network Achieved Profit/Loss (NPL) Index shows that the achieved profit level reached its highest point in five months on October 24th. The last time NPL reached its current level, Bitcoin prices dropped to $30000. Shortly after, BTC formed a local high point and triggered a round of adjustments.
As mentioned above, this index indicates that Bitcoin prices may be about to undergo a downward correction.
Santiment's 30 day market value and realized value (MVRV) metric provides more specific evidence for Bitcoin price correction. This indicator is used to measure the average profit and loss situation of investors who have purchased Bitcoin in the past month. At present, the index has dropped from nearly 15% to 13%. This number represents the percentage of Bitcoin holders who have made profits in the past month compared to the total number of holders. If these investors start selling Bitcoin to generate profits, it may trigger a round of retracement.
Since 2021, 14% of MVRV has become a clear local high pattern and triggered a pullback. Therefore, if history repeats itself, there may be a round of price adjustments in Bitcoin.
Santiment's whale trading count index saw a significant surge on October 24th, bringing the index close to 15000 points. In the past three increases, Bitcoin prices have all undergone a round of adjustment.
Therefore, if history repeats itself, investors should be prepared for the decline in Bitcoin prices.
Given that both on chain indicators and technical aspects suggest that the upward trend may be about to stop and begin to adjust, investors should be prepared. Although bulls still hold control, if Bitcoin prices cannot remain above $25836, there may be a correction that could expand the 2023 rally to $40000 or higher.
However, breaking through the support level of $25836 within the weekly timeframe may lead to lower lows. This will trigger significant fluctuations and raise concerns among investors. If Bitcoin prices reach a lower low after this trend, it will confirm a reversal of the trend and may lead to a sharp drop in Bitcoin prices to the next critical support level of $21000.
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