Bitcoin is experiencing a sharp correction after losing support at $115,000, triggering a wave of uncertainty in the market. After weeks of consolidation in a narrow range, the price of Bitcoin has sharply declined, sparking debate among analysts about its short-term direction. Some experts warn that Bitcoin may continue to decline as investors take profits and caution returns to the market. Meanwhile, others remain more optimistic, considering this correction as a temporary pause before Bitcoin attempts to regain its all-time highs.
Key data from CryptoQuant adds an additional layer of analysis. The metrics show that Bitcoin's price is currently experiencing a sharp rise, with valuation indicators signaling excessive upward momentum. This suggests that the current consolidation phase may extend further as the market resets. Until demand stabilizes and new funds flow in, Bitcoin may continue to trade in a volatile environment, with the $112,000-$115,000 range representing a key battleground between bulls and bears.
As the influence of the Federal Reserve's monetary policy and global macroeconomic factors continue, the next significant move for Bitcoin is likely to depend on a mix of market sentiment, institutional demand, and broader investor risk tolerance in the coming weeks.
The stock-to-flow model for Bitcoin indicates overvaluation.
Prominent analyst Darkfrost recently shared insights on X, emphasizing the importance of the stock-to-flow (S2F) ratio chart for Bitcoin as a reliable indicator for assessing its price cycle. According to Darkfrost, when the S2F indicator rises above a value of 3, it usually indicates that Bitcoin is entering a phase of sharp increase, suggesting a high likelihood of market correction. Currently, the S2F value is approaching this important threshold, prompting Darkfrost to warn investors that this may be the right time to take profits before a deeper correction occurs.
Darkfrost's analysis indicates historical patterns where similar readings of the S2F indicator preceded sharp price declines. In September 2021, the price of Bitcoin fell from $63,500 to $30,800 after its S2F reading exceeded the overvaluation zone. In November 2021, the price of Bitcoin dropped from $67,000 to $15,800 after peaking in the S2F indicator. More recently, in March 2024, Bitcoin experienced a sharp correction from $73,000 to $54,000 after entering the overbought region.
This integrated alert system, designed for long-term market participants, is a strategic tool to help investors navigate Bitcoin's volatile cycles. While the current correction may seem surprising, Darkfrost emphasizes that such pullbacks are necessary to reset the market and build a sustainable foundation for future growth. Investors are advised to exercise caution and closely monitor the S2F chart as Bitcoin passes through this critical phase.
Bitcoin is trying to reclaim $115,000.
Bitcoin is trying to recover from its recent decline, currently trading at around $115,019 as shown in the eight-hour chart. The price rebounded from the support level at $112,000, but it faces strong resistance at $115,724, which formed a key support level during the two-week consolidation period in July.
The simple moving averages of 50 and 100 days are currently just above the current price, reinforcing the upper resistance level. The 200-day simple moving average, at around $110,677, continues to provide strong support, maintaining the overall upward trend for now. However, Bitcoin needs to reclaim $115,724 and hold above this level to regain upward momentum.
Trading volume has been relatively low during the recent rise, indicating weak buying interest. If Bitcoin fails to decisively break above the resistance level of $115,000, the price may retreat and test the $112,000 level again. On the positive side, a successful breakout above $115,724 could pave the way for a retest of the historical resistance high at $122,077.
