As a seasoned researcher with years of experience tracking the cryptocurrency market, I must admit that Bitcoin’s recent surge and subsequent correction is not unfamiliar territory for me. The euphoria of a bull run followed by the inevitable fear of missing out (FOMO) has been a recurring theme in this space.
In the past three weeks following the U.S. elections, Bitcoin experienced an impressive surge, soaring from approximately $70,000 to almost touching $100,000 – a significant leap in its recent history.
In just under a month, the asset surpassed $30,000, making a substantial increase. However, it became almost predictable that a correction would follow, which occurred yesterday. Bitcoin encountered resistance at around $99,000 and rapidly dropped by over $6,000 within hours.
Warnings
Despite some indicators suggesting potential reversal, it’s worth noting that CryptoQuant’s analysts pointed out several reasons for this correction. Among them were Short-Term Holders (STH) cashing out as their holdings grew by approximately 40-50% over a few weeks against the dollar. This development, although offering a glimmer of hope for prices reaching $100,000, generally suggested a more likely downturn in value.
The anxiety of not being part of something (FOMO) increased significantly, often a warning sign for a possible local peak. Furthermore, the Fear and Greed Index, which reflects market sentiment, was heavily leaning towards ‘greed’ for quite some time. As we’re all aware, Warren Buffett advises selling when others are excessively greedy.
Reflecting on the insights shared by analysts from X, it’s important to acknowledge that a price dip following such an impressive rally is typically inevitable. These experts even cautioned that Bitcoin has experienced more severe pullbacks during past bull runs, suggesting that the bottom we’ve seen so far might not be the absolute lowest yet.
On-Chain Data Says Bull Market Still On
CryptoQuant’s market analyst, MAC_D, commented on the situation, suggesting that the price drop was primarily caused by excessive leverage, as open interest and estimated leverage ratio hit their highest levels of the year. Furthermore, they mentioned that a potential correction, ranging from 10% to 20%, might occur as a normal occurrence in the market.
Despite a possible short-term decline in price, MAC_D points out several on-chain indicators hinting that the current bull market remains vigorous, and Bitcoin might not have attained its maximum for this particular cycle yet.
“Cycle metrics such as MVRV, NUPL, and Puell Multiple still indicate that Bitcoin is in a bull market with upward potential. The key here is to identify major accumulation periods during corrections, with the ‘Short-Term SOPR’ metric being particularly useful.”
On November 21st, the temporary Spend Output Profit Ratio (SOPR) surged close to 1.1, indicating that Short-Term Holders (STHs) were cashing out their gains. This development, surprisingly, might signal positive news for Bitcoin.
Historical trends indicate that when short-term traders sell Bitcoin at a loss, it can frequently trigger a bounce back.
Whales Keep Buying
Meanwhile, some investors who bought for the short term appear to be selling off their assets, including those taking a loss due to the massive amounts amassed at prices above $97,000. On the other hand, the large investors, or “whales,” seem to be holding on tight to their investments.
According to data from Lookonchain, it appears that five new wallets withdrew approximately $86.4 million in Bitcoin from Binance prior to the market downturn.
Whales continue to accumulate $BTC!
In the past 5 hours, 5 fresh wallets withdrew 886 $BTC($86.4M) from #Binance.
These are Bitcoin addresses:
— Lookonchain (@lookonchain) November 25, 2024
Yesterday, I was astonished to learn that MicroStrategy, a company I analyze, founded by Saylor, made yet another jaw-dropping acquisition – this time, worth approximately $5.5 billion in Bitcoin (BTC). This latest purchase has increased their total BTC holdings to an impressive 387,000 coins.
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2024-11-26 10:28