Bitcoin (BTC) reached a high of $83,700 during the early Asian hours on March 12, following a low of $76,600 on March 11. This fluctuation raises questions about the stability of BTC prices, particularly as it faces rejection around the $84,000 threshold.
Weak Demand for Bitcoin
Significant outflows from spot Bitcoin exchange-traded funds (ETFs), exceeding $1.5 billion in the last fortnight, have contributed to the current price decline. According to market intelligence from CryptoQuant, Bitcoin’s demand remains low, indicating decreased risk appetite among investors.
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Apparent demand reflects the balance between Bitcoin production and inventory changes.
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Current figures indicate that Bitcoin is facing challenges, with a notable drop in apparent demand to -93,700 BTC, a stark contrast from previous highs.
Such trends historically correlate with price drops, similar to the sharp decline observed in July 2024, suggesting that Bitcoin could be in for more turbulence if current conditions persist.
Valuation Metrics Signal Correction
Despite a recent rebound, Bitcoin’s valuation metrics are leaning bearish, suggesting a deeper correction could be imminent. The bull-bear market cycle indicator is currently at its most bearish level, a concerning sign for traders.
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The MVRV ratio Z-score is below its 365-day moving average, indicating a loss of momentum in the upward price trajectory.
“Historically, valuation metrics at these levels have signaled either a sharp correction or the start of a bear market.”
The Bear Flag Pattern and Its Implications
From a technical standpoint, Bitcoin is currently trading in a bear flag pattern, signifying possible downward movement ahead. With critical support testing around $82,000, a breakdown could initiate further declines, potentially targeting $68,400, showcasing a 17% drop from current levels.
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Analysts warn that if the support zone between $75,000 and $78,000 fails, Bitcoin could plummet even further to $63,000.
This volatility underscores the necessity for investors to stay informed and cautious in their trading strategies amidst ongoing market fluctuations.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making any decisions.
