The price of Bitcoin has been forming a concerning bearish pattern over the past few months, indicating the likelihood of a deep drop.
Investors are cautiously watching as Bitcoin attempts to break through key levels. If history repeats itself, the price could drop to $92,000.
On-chain analysis: Bitcoin is overbought
The NVT ratio (Network Value to Transactions) is at its highest level in a year, indicating a significant gap between the network's valuation and actual transaction activity. Historically, similar values of this indicator have preceded corrections in the market.
Last week, NVT slightly decreased under the influence of external factors, however, the overall trend indicates Bitcoin is overbought. Historical patterns show that corrections often follow such accumulation periods.
The funding rate in the Bitcoin futures market remains positive. This means that traders with long positions are paying a premium to short position holders. Typically, this indicates a prevalence of bullish sentiment, as investors are willing to pay an additional fee in anticipation of a price increase.
The liquidation map shows that a price drop to $92,000 could trigger the liquidation of long positions totaling more than $1.17 billion. With such volume, it will be very difficult to hold key support levels.
For reasons behind Bitcoin's drop, read the special material on BeInCrypto.
Technical analysis: BTC is under pressure from sellers
For the past two months, a bearish pattern has been forming on the charts, confirming the increasing pressure from sellers. The price is currently holding above the psychologically significant level of $100,000, but a break below this level would confirm a bearish scenario.
If it falls below $98,000, a correction to $92,000 is likely, which would represent a 9% drop. Such a movement could trigger a new wave of selling and worsen Bitcoin's short-term prospects. However, if market conditions improve and the price stabilizes above $100,000, a trend reversal may be possible. The key level for bulls is $102,734. A breakthrough at this level would open the way to $105,000, negating the current bearish scenario.
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