The world’s largest cryptocurrency, Bitcoin, was roaring and climbing towards its all-time high until a few days ago. In fact, BTC climbed to a yearly high of $19,490 after it managed to surge by 42%. At the time of writing, however, corrections were setting in, with Bitcoin down by 16% in just two days. While the development did come as a surprise to many, there were quite a few signs indicating that a drop was incoming.
Signs of retracement?
There were many metrics that predicted the upcoming reversal of the bull market. For starters, the Funding rate that was mostly positive was indicating that there was increasing long pressure than short. Historically, these spikes in the metric have seen the price of BTC drop and rekt all longers.
According to Santiment, the huge spike in positive funding rates, clubbed with the rising price, warned of a possible long liquidation.
Source: Santiment
As we can see in the market, the rise in funding rate has once again resulted in the value of Bitcoin dropping on the charts.
Since Bitcoin has attracted more and more attention from the people due to its rising price, the interest was surging too, with the asset soon returning better profits to investors. This led to many institutional investors also joining the Bitcoin bandwagon, creating a positive environment for BTC growth. However, despite the enthusiasm, the Daily Active Addresses for BTC have been sloping downwards lately, a negative metric for the crypto’s price.
Source: Santiment
In fact, the aforementioned metrics would reveal that Bitcoin’s recent highs were, in fact, a local top.
Further, the downtrend of the mean dollar invested age had been hinting at a reversal for over a month. However, the coin also reached the peak in a month. As Bitcoin’s value was approaching its previous peak, more and more people began exiting their positions, a sign of the larger market not being confident enough in Bitcoin’s near-term direction.
Where do we go now?
As mentioned, Bitcoin’s value started to break down over the past couple of days. However, while the correction did push the value closer to $16k, it soon managed to bounce back. As Santiment notes,
“We are witnessing a strong BTC rally through a bunch of warning signs and red flags.”
It should be noted though that there has been increasing selling pressure in the BTC market. We may see the value of the coin drop further on the charts, before stabilizing briefly at $15k.
On the contrary, in order to reach $19k again, Tether [USDT] on exchanges need to remain low as if the exchange supply rises, it would signal a profit-taking opportunity for traders.
