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Bitcoin corrects strongly after historic high, but metrics still suggest bullishness
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THE Bitcoin (BTC) experienced one of its biggest appreciations in recent weeks, rising from less than $70,000 to almost $100,000 since the US elections. However, after accumulating a gain of more than US$30,000 in less than a month, the asset faced a correctionwith its price dropping more than US$6,000 in a few hours this Monday (26).
After reaching US$99 thousand, the Bitcoin suffered a selling movement which was attributed, in part, to the profit making by short-term investors. According to CryptoQuant, these investors took advantage of the 40-50% increase in their assets against the dollar to sell. But the company highlighted that this profit-taking may not have come to an end yet:
This profit-taking, coupled with the increased feeling of “fear of missing out” (FOMO) and the fear and greed index positioned in extreme greed territory, generated warnings of a possible short-term correction.
Analysts also pointed out that the correction is not uncommon after periods of strong appreciation. In this sense, they highlighted that previous Bitcoin bull cycles presented even more intense drops.
Why did Bitcoin crash?
Although the current correction has raised concerns, on-chain data indicates that the bull market is still active. According to CryptoQuant analysts, the decline is related to the overheating in the use of leverage. They highlighted that corrections of up to 20% are “natural phenomena” within a bull market.
Furthermore, other metrics indicate that the Bitcoin has not yet reached the peak of this cycle. The short-term SOPR indicator, for example, which jumped to 1.1 on November 21, suggests that short-term investors are taking profits, something that historically precedes recoveries.
As short-term investors liquidate positions, whales continue to accumulate Bitcoin. According to data from Lookonchain, five newly created wallets withdrew approximately $86.4 million worth of Bitcoin from Binance even before the correction.
Furthermore, the MicroStrategyled by Michael Saylor, announced the acquisition of almost US$5.5 billion in Bitcoin, bringing its reserves to around 387 thousand BTC.
This movement of large investors reinforces the long-term optimism in the marketeven amid Bitcoin’s recent price fluctuations.
Bitcoin corrects strongly after historic high, but metrics still suggest bullishness
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Bitcoin corrects strongly after historic high, but metrics still suggest bullishness
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Bitcoin corrects strongly after historic high, but metrics still suggest bullishness
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Bitcoin corrects strongly after historic high, but metrics still suggest bullishness
