In recent times, Bitcoin [BTC] has been steadily heading upwards, surpassing the $66k mark once again. While this has signaled a positive trend for the primary cryptocurrency, there are indications that the market could soon witness a reversal.
This concern arises from the emergence of a bearish pattern spanning multiple years on BTC’s chart.
Bitcoin Faces Impending Risks
Previously, in a notable development, the cryptocurrency managed to break through its long-term moving average, breaching significant resistance levels. This led to a surge in BTC’s price, pushing it above $66k on exchanges.
Following this milestone, over 49 million BTC addresses found themselves in a profitable position, accounting for more than 92% of all BTC addresses.
Nonetheless, the ongoing bullish momentum could be short-lived. Well-known crypto analyst Ash Crypto recently drew attention to a long-standing bearish head and shoulder pattern evident on BTC’s chart.
This pattern, which first surfaced in 2021, had BTC’s price edging closer to the neckline support of the formation. The analyst cautioned that a failure to hold this support level might trigger a significant market downturn.
Could BTC Be Headed for a Correction?
Anticipating a potential market downturn, an examination of BTC’s metrics was conducted to assess the likelihood of a decline to the neckline support level.
According to the data from CryptoQuant, BTC’s net deposits on exchanges had surged significantly compared to the previous seven-day average, indicating an upswing in selling pressure. Historically, increased selling pressure has often been followed by price corrections.
Furthermore, the asset’s aSORP indicator had turned red, indicating a rise in selling activity among investors who were realizing profits. During a bull market phase, this could suggest a potential market peak. Additionally, the NULP metric displayed bearish signals, collectively pointing towards a probable correction in BTC’s price.
Despite these warning signs, a positive metric was identified in Glassnode’s data analysis.
The declining trend in BTC’s NVT ratio suggested that the asset was undervalued, hinting at a probable price surge in the near future.
As the NVT ratio suggested a potential uptrend, an evaluation of Bitcoin’s weekly chart was conducted to gauge possible future movements if the bullish momentum sustained. The analysis revealed that a continuous rally could propel BTC towards retesting its all-time high levels.
In an ideal scenario, BTC could mark new all-time highs. However, in case of a corrective phase, BTC might retrace back to the $54k threshold in the forthcoming weeks.