Bitcoin has corrected in brutal fashion this week after market forces such as stock selling and negativity towards the global economy took hold.
The recent inability to break above $70,000 and subsequent loss of the $66,000 area provides an indication that Bitcoin could be headed back to the bottom of its range.
Source: Tradingview.com
This week I will be looking at on-chain and technical factors that may provide a hint as to where Bitcoin is going and answering the question, do we need to be worried about this recent drop?
Starting with the obvious, and way too many Bitcoin traders have recently been enjoying profits, as the Total BTC Supply In Profit was close to the highs of the year.
Source: Santiment.net
The market is rarely kind, so it was no surprise to see a big wipeout after Bitcoin failed to break above $70,000.
Thankfully, this metric has had a major reset this week.
Source: Santiment.net
For me, the worry is this metric may need to reset even lower than when Bitcoin fell back towards $53,500 last month.
Encouragingly, Shark and Mid-tier whales have been buying into the dip, while retail have been selling.
Source: Santiment.net
Generally, this is a great sign, but we probably need to see a major spike in Token Age Consumed to cement the idea that the price can't get much lower.
Source: Santiment.net
Potentially, the Funding Rate for Bitcoin may need to collapse as a final "bottom signal". Currently, the Funding Rate still remains elevated at current levels.
Ideally, we need to see the metric spiking substantially lower to generate the potential signal that a price floor has truly formed.
Source: Santiment.net
Technically, Bitcoin has some pretty compelling evidence that it is headed towards the $58,000 area next week.
This would be especially likely if $60,000 gave way.
Elliot Wave analysis on the 4-hour time frame is also matching downside price forecasts from Demark Indicator, in that $58,000 is indicated.
Source: Symbolik.com
Also, there is a gap on the CME price chart around this area that may well need to be filled before BTC finds a price floor.
Source: Tradingview.com
Encouragingly, masses of leveraged shorts have been building this week, and these leveraged shorts are stacked between $66,000 and $69,000.
This makes me think that we will reverse higher after this mini-reset.
Source: Hyblockcapital.com
Elliot Wave analysis is still predicting a final 5th wave towards three primary targets, which are $74,000, $86,000, and $106,000.
Source: Tradingview.com
Personally, I still think they are achievable, but we really need to see Bitcoin holding the $58,000 region next week and quickly heading back towards the $66,000 level.
