- BTC’s price rallied by over 6% last week, but its daily chart turned red.
- A few datasets suggested selling pressure on Bitcoin was high.
After a week-long rally, Bitcoin’s [BTC] price action turned sluggish as it dropped marginally over the last 24 hours. This happened at a time when one of the key metrics registered a sharp increase, indicating a further price plummet in the days to follow.
Bitcoin’s price to crash again?
The king of cryptos had a promising start to the new year as its price surfed by more than 6% in the last seven days. But the gaining spree came to an end in the recent past as its price dropped marginally.
According to CoinMarketCap, BTC was down by 0.11% in the last 24 hours. At the time of writing, BTC was trading at $45,161.20 with a market capitalization of over $884 billion.
While that happened, a key BTC metric registered consistent upticks. Ali, a popular crypto analyst, recently pointed out in a tweet how Bitcoin’s open interest was rising.
With #Bitcoin‘s Open Interest nearing $11.5 billion, the market may be entering a crowded trade zone.
This surge in open interest, while indicating increased $BTC trading activity, could also signal market volatility. Going long #BTC now bears risks, especially if the market… pic.twitter.com/kgzxhhnaCb
— Ali (@ali_charts) January 2, 2024
Although the spike in open interest suggests more BTC trading activity, it may also be a hint of volatility in the market. Therefore, AMBCrypto took a closer look at Bitcoin’s current state to better understand whether a price correction was on its way.
AMBCrypto reported earlier that the number of BTC investors in losses was higher than the number of investors in profits, which already raised alarms. Upon a check on CryptoQuant’s data, we found that selling pressure on BTC was increasing as its exchange reserve rose.
The coin’s aSORP was red, meaning that more investors were selling their holdings at a profit. In the middle of a bull market, this typically signals a market top.
Additionally, Bitcoin’s Net Unrealized Profit and Loss (NULP) indicated that investors were in a “belief” phase where they were in a state of high unrealized profits.
Source: CryptoQuant
However, AMBCrypto’s look at Santiment’s data revealed a different story.
BTC’s supply on exchange continued to decline while its supply outside of exchanges increased. This suggested that buying pressure on the coin was high. Positive sentiment around BTC was also high, reflecting investors’ confidence in the king of cryptos.
Source: Santiment
Read Bitcoin’s [BTC] Price Prediction 2023-24
What market indicators suggest
AMBCrypto then planned to have a look at BTC’s daily chart to see what key market indicators had to say. The MACD displayed a bullish crossover.
Bitcoin’s Relative Strength Index (RSI) also maintained its upward movement, increasing the chances of a price uptick in the coming days. However, a bearish indicator was BTC’s Chaikin Money Flow (CMF), as it took a southward path in the last few days.
Source: TradingView
