BTC Pumps Toward $31K But is a Correction Imminent? (Bitcoin Price Analysis)

After an extended period of consolidation, Bitcoin’s price has successfully surpassed the critical $30K resistance level. However, it is important to exercise caution within the market, particularly in the short term.

Technical Analysis

By: Edris

The Daily Chart

On the daily timeframe, Bitcoin’s price has experienced a rapid upward movement in the past week, following a strong bounce from the $25K support level. The resistance at $30K has been exceeded, and the price is attempting to maintain its position above it.

However, the RSI indicator currently signals an overbought condition, suggesting a probable correction. If it occurs, the 50-day moving average might act as a support level around $27,500, followed by the 200-day moving average near the $25K region.

The 4-Hour Chart

The 4-hour timeframe reflects a similar scenario to the daily chart, with a strong upward movement and breakthrough of resistance levels. The recent rally commenced following the breakout from the descending channel, propelling the price to higher highs above $30K.

Nevertheless, it is important to exercise caution due to a clear bearish divergence observed on the RSI indicator. This suggests the possibility of consolidation or correction shortly, prompting investors to remain vigilant.

On-chain Analysis

Bitcoin Long-term holder SOPR

After Bitcoin’s recent rally, many holders who had been experiencing losses for several months are now able to sell and realize profits.

The Long-term holder SOPR metric, depicted in the chart along with a 100-day moving average, indicates the ratio of profits or losses realized by long-term holders. Values above 1 indicate profit-taking, while values below 1 signify losses.

The chart clearly shows that long-term holders, who had been experiencing losses for nearly a year, have now begun to sell at a profit due to the recent price surge. While this situation is not necessarily harmful, it could increase the supply of Bitcoin, and without sufficient demand, it could potentially lead to a subsequent decline in price.

SPECIAL OFFER (Sponsored) Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO50 code to receive up to $7,000 on your deposits.
Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.
Cryptocurrency charts by TradingView.