Bitcoin managed to surge above $66k recently, causing excitement among investors. However, the celebration was short-lived as the cryptocurrency quickly dipped back below that threshold. Recent data hints at the possibility of a substantial price correction on the horizon.
Bitcoin’s Future Outlook
Over the past 24 hours, Bitcoin underwent a price correction, dropping below $66k to trade around $65,504.34 at the time of writing. Speculation about a potential price correction was already circulating, with analysts warning of a bearish divergence in Bitcoin’s 4-hour chart.
Crypto Bullet, a renowned crypto analyst, recently highlighted this bearish divergence on Twitter, indicating a high likelihood of a price correction. Should the bearish trend continue, Bitcoin could see a significant drop back to $60k, according to the tweet.
Analyzing Key Metrics
Examining Bitcoin’s on-chain data, experts sought to uncover additional clues pointing towards a looming price correction. Santiment’s data analysis revealed a slight decline in Bitcoin’s MVRV ratio following a surge, typically interpreted as a bearish signal.
Furthermore, the overall market sentiment towards Bitcoin turned bearish as indicated by a decrease in its weighted sentiment. Coinglass’ data reinforced this sentiment, showing a decrease in Bitcoin’s long/short ratio, signaling a tilt towards short positions over long positions in the market – a bearish indicator.
However, there are factors working against the bearish sentiment. The fear and greed index sat at 38%, indicating a “fear” phase in the market. Historically, this phase often precedes a surge in prices, potentially averting Bitcoin’s fall back to $60k in the short term.
An analysis of the daily chart revealed that the 9-day moving average (MA) remained comfortably above the 21-day MA, implying a bullish momentum in the market. If this trend holds, Bitcoin could target $68k in the next bullish rally.
Should the analysis hold true, Bitcoin faces the likelihood of dropping back to $60k in the near future, casting a shadow of uncertainty over its short-term prospects.