- Bitcoin recently experienced a 10.7% drop due to miner sell-offs and the recent halving, but analysis suggests a bullish reversal is imminent.
- Key on-chain metrics and technical patterns indicate that Bitcoin could rebound to $70,000 and potentially higher.
Bitcoin, the world’s leading cryptocurrency, recently experienced a significant drop of 10.7%, plummeting to $64,275. This decline is attributed to a wave of miner sell-offs and the effects of the recent Bitcoin halving, which have collectively tightened profit margins for miners and led to a substantial liquidation of their reserves. Despite this, market analysis indicates a potential bullish reversal on the horizon.
Understanding the Correction and Potential Rebound
The current market scenario for Bitcoin showcases a classic example of a flag pattern formation, often seen as a precursor to a major breakout. Despite the price drop, Bitcoin continues to trade above the critical 100-and-200-day Exponential Moving Averages (EMA), signaling that the broader trend remains bullish. The intraday trading volume stands at $8.03 billion, which marks a significant 60% loss, further indicating reduced volatility and easing selling pressure over the weekend.
The correction trend began in the second week after Bitcoin’s price fell from $72,000, resulting in a market cap decline to $1.267 trillion. Contributing to this downturn, Bitcoin miners sold over 30,000 BTC, equivalent to approximately $2 billion, marking the fastest sell-off pace in over a year. This massive sell-off is a direct result of the halving event, which reduced rewards and increased operational costs, forcing miners to liquidate their holdings to manage expenses.
🚨 Bitcoin miners have sold over 30k BTC (~$2B) since June, the fastest pace in over a year. The recent halving has tightened margins, prompting this sell-off. pic.twitter.com/dy289bu7p4
— IntoTheBlock (@intotheblock) June 22, 2024
Signs of a Market Bottom: The SOPR Indicator
Amid this turbulent phase, CryptoQuant’s author Axel Adler Jr. highlights an important on-chain metric: the Spent Output Profit Ratio (SOPR) for short-term holders. The SOPR, based on a 90-day moving average, has dipped below 1.0. This metric is crucial as it measures the profit and loss of Bitcoin holders, with a value below 1.0 indicating that holders are selling at a loss. Historically, this scenario is often a sign of a market bottom, suggesting that the correction phase might be nearing its end.
The SOPR (Spent Output Profit Ratio) for short-term holders (90-day simple moving average) falling below 1.0 could signal the end of a correction and the beginning of a new bullish trend.
— Axel 💎🙌 Adler Jr (@AxelAdlerJr) June 23, 2024
More time is needed for this to occur. pic.twitter.com/NIpNw3IdI3
Moreover, the daily chart analysis of Bitcoin shows the current correction as part of a sideways trend within the flag pattern. The dynamic resistance and support levels indicated by the two trendlines play a vital role in influencing Bitcoin’s price movements. If the flag pattern holds true, the ongoing consolidation phase is temporary and is likely to be followed by a significant breakout.
As the broader bullish trend continues, Bitcoin is poised to breach the flag pattern’s resistance decisively. A successful breakout is expected to propel Bitcoin’s price to $89,150, with the potential for an extended rally reaching $135,000. This optimistic outlook hinges on the market’s ability to sustain reduced selling pressure and maintain the current support levels.
While Bitcoin faces short-term challenges due to miner sell-offs and market corrections, the broader trend remains bullish. Key on-chain metrics like the SOPR suggest that a market bottom might be forming, paving the way for a potential rally to new highs.
