Bitcoin correction almost done as realized losses reach above weekly averages
A Similar Pattern Emerges
The daily chart of Bitcoin (BTC) has produced three consecutive red candles for the first time since the first week of November, which coincidentally was the lead-up period to Donald Trump’s US election victory. This similarity between the two periods is striking.
A Retest of the 50-Day EMA Level
Another similarity between the last time three or more red candles were observed on the daily chart was that Bitcoin retested the 50-day Exponential Moving Average (EMA) level. The EMA is a widely used technical indicator in trading, which helps to smooth out price fluctuations and provide a clearer picture of the market trend.
BTC’s Price Dropping by Over 15% Since All-Time High
With BTC’s price dropping by more than 15% since its all-time high, one analyst said that most of the drawdown is potentially over for the largest cryptocurrency. This assertion is based on the observation that a correction of this magnitude is often followed by a period of consolidation or even a rally.
Bitcoin Correction ‘Almost Done,’ Says Analyst
Captain Faibik, an independent crypto trader, stated in an X post that BTC’s correction was approaching a conclusion. He highlighted that the current decline is due to a massive bearish divergence between Bitcoin’s price and its Relative Strength Index (RSI) over the past month.
A Bearish Divergence
Such divergences are usually followed by an 8% to10% fall, which is considered a ‘healthy reset.’ The trader expected the price to bounce from the $94,000 range, as illustrated in his chart. This expectation is based on the analysis of historical data and the observation that similar divergences have led to price corrections in the past.
A Deeper Pullback Ahead?
Cold Blooded Shiller, an anonymous crypto trader, expected a deeper pullback for Bitcoin based on the same divergence pattern. Comparing BTC’s current price action to January 2024, the trader said that if a similar outcome unfolds, BTC’s sell-off may stretch down to as low as $85,000.
Incessant Selling by Spot Holders
Byzantine General, a futures market analyst, highlighted incessant selling by spot holders. The analyst said, ‘We actually got a perp premium at the moment because spot is selling off so much it’s disconnecting from the derivatives market.’ This observation suggests that there is significant selling pressure in the spot market, which may lead to further price declines.
Coinbase Selling Activity Reaches a Quarterly Low
Maartunn, a CryptoQuant analyst, said that this is the most significant Coinbase selling activity since Bitcoin was priced at $66,000. The selling pressure is ‘relentless,’ as the Coinbase premium fell to a quarterly low. This observation suggests that there is significant institutional selling in the market.
Related Losses Reach $28.9 Million
Bitcoin realized losses reached $28.9 million with increasing selling pressure by the hour. Axel Adler Jr, a Bitcoin onchain analyst, highlighted that the BTC realized losses over the past 5 days reached $28.9 million, 320% above its weekly average in 2024.
A Bearish Break of Structure (BOS)
Analyzing Bitcoin’s mid-term chart revealed a bearish break of structure (BOS). However, there is a clear invalidation for a reversal if Bitcoin continues to close a daily candle above $95,000. This observation suggests that the current trend may be subject to change.
An Immediate Recovery
As observed in the chart, the 4-hour candle has established an immediate recovery above $95,000 after dropping to $92,777. For Bitcoin to nullify the bearish sentiment, a daily candle above $95,000 would be ideal.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Subscribe to Our Newsletter
Get critical insights to spot investment opportunities, mitigate risks, and refine your trading strategies. Delivered every Monday.
By subscribing, you agree to our Terms of Services and Privacy Policy.
Bitcoin Whale Support
Related: Bitcoin whale support includes mid-$60K zone in new BTC price warning
Increasing Selling Pressure
The volume of realized losses also peaked above its weekly average. Axel Adler Jr, a Bitcoin onchain analyst, highlighted that the BTC realized losses over the past 5 days reached $28.9 million, 320% above its weekly average in 2024.
Invalidation for Reversal
However, there is a clear invalidation for a reversal if Bitcoin continues to close a daily candle above $95,000. This observation suggests that the current trend may be subject to change.
A Healthy Reset
Such divergences are usually followed by an 8% to10% fall, which is considered a ‘healthy reset.’ The trader expected the price to bounce from the $94,000 range, as illustrated in his chart. This expectation is based on the analysis of historical data and the observation that similar divergences have led to price corrections in the past.
A Deeper Pullback Ahead?
Cold Blooded Shiller, an anonymous crypto trader, expected a deeper pullback for Bitcoin based on the same divergence pattern. Comparing BTC’s current price action to January 2024, the trader said that if a similar outcome unfolds, BTC’s sell-off may stretch down to as low as $85,000.
Incessant Selling by Spot Holders
Byzantine General, a futures market analyst, highlighted incessant selling by spot holders. The analyst said, ‘We actually got a perp premium at the moment because spot is selling off so much it’s disconnecting from the derivatives market.’ This observation suggests that there is significant selling pressure in the spot market, which may lead to further price declines.
Coinbase Selling Activity Reaches a Quarterly Low
Maartunn, a CryptoQuant analyst, said that this is the most significant Coinbase selling activity since Bitcoin was priced at $66,000. The selling pressure is ‘relentless,’ as the Coinbase premium fell to a quarterly low. This observation suggests that there is significant institutional selling in the market.
Related Losses Reach $28.9 Million
Bitcoin realized losses reached $28.9 million with increasing selling pressure by the hour. Axel Adler Jr, a Bitcoin onchain analyst, highlighted that the BTC realized losses over the past 5 days reached $28.9 million, 320% above its weekly average in 2024.
A Bearish Break of Structure (BOS)
Analyzing Bitcoin’s mid-term chart revealed a bearish break of structure (BOS). However, there is a clear invalidation for a reversal if Bitcoin continues to close a daily candle above $95,000. This observation suggests that the current trend may be subject to change.
An Immediate Recovery
As observed in the chart, the 4-hour candle has established an immediate recovery above $95,000 after dropping to $92,777. For Bitcoin to nullify the bearish sentiment, a daily candle above $95,000 would be ideal.
