After recently breaking through the $65,000 mark, Bitcoin (BTC) price may have hit a brick wall. This recent price rally indicates strong bullish momentum, but historical patterns suggest BTC could pull back. before the rally continues.
This on-chain analysis highlights the metrics supporting this prediction and what investors should expect in the near term.
On-chain metrics reveal it's time to take a break
The rise in Bitcoin price to $65,497 is contrary to investors' expectations at the beginning of September, when most expected it to be a bearish month. However, according to the daily active address (DAA) price divergence, BTC could fall before retesting $70,000.
Price DAA checks whether user engagement increases with the value of the coin. When the price increases with active addresses, it is a buy signal and the value of the cryptocurrency may increase.
At the time of writing, Bitcoin price DAA had plummeted to -54.89%. This decline indicates that market participants have reduced their engagement with the coin. Therefore, the recent uptrend may be weak as this is a sell signal.
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Furthermore, the performance of the coin affected the profitability of its holders. On September 16th, 79.92% of Bitcoin holders were in the money. However, based on Historical In/Out of Money (HIOM), which compares profitable addresses at different price points, 91.97% are currently profitable.
Historically, when this ratio reaches such a level, some holders take profit and the price of Bitcoin falls. For example, something similar happened in July when the percentage of profit holders was around 93%.
After a few days, it dropped to 78%. Another scenario occurred on August 25th, when the percentage was 88.35%, and then 76.23% due to the fall in Bitcoin price. Therefore, if history matches the current situation, BTC could be set for a short-term drawdown.
BTC Price Prediction: $60,000 Arrives
Although the price is expected to deliver a positive return, the daily chart shows Bitcoin's attempt to reach $69,000 has hit a roadblock. This shows that the bears are trying to overturn the bulls' dominance.
If the price falls below $65,000, the $65,838 area will be the primary resistance zone. However, buyers are likely to try to protect BTC from falling below the $63,093 support. The graph below shows how this potential defense can fail.
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Therefore, the price of Bitcoin could fall to $60,348 within a few days. On the other hand, if the price closes above $65,838, the trend will shift in favor of the bulls. In that scenario, Bitcoin could soar to $68,236.
Disclaimer
In accordance with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. Although BeInCrypto strives for accurate and unbiased reporting, market conditions are subject to change without notice. Always do your own research and consult a professional before making any financial decisions. Please note that our Terms of Use, Privacy Policy, and Disclaimer have been updated.
