Bitcoin has experienced one of the most impressive surges in its history after the US election three weeks ago, soaring from below $70,000 to near $100,000 trading levels.
After reaching over $30,000 in less than a month, a price decline was finally inevitable. Yesterday, BTC was rejected at $99,000 and fell over $6,000 in a matter of hours.
There were several warning signs of this correction. CryptoQuant analysts have outlined several factors contributing to this decline, including Short-Term Holders (STH) taking profits after their holdings rose 40-50% in a few weeks against the dollar. While this suggests an opportunity to make an attempt to conquer the $100,000 target level, the more likely scenario is a price decline.
Fear of missing out (FOMO) is also on the rise, which usually signals a potential temporary top. Additionally, the Fear and Greed Index, which reflects current market sentiment, has been in the ‘greedy’ zone for several weeks.
As previously reported, many analysts at X expect a price drop after such a large spike. In fact, they warn that BTC has experienced a larger correction in previous bull cycles, meaning that the bottom of the asset may not have been reached yet.
Analyst MAC_D of CryptoQuant also noted that this price drop occurred “due to leverage, with open interest and leverage ratios estimated to have reached annual highs.” They added that similar or larger corrections of up to 20% can be considered a natural phenomenon.
While other price drops may occur in the short term, MAC_D highlights several on-chain metrics that suggest the bull market is still active and BTC has not reached the peak of this cycle.
“Cyclic metrics such as MVRV, NUPL, and Puell Multiple still indicate that Bitcoin is in a bull market with upside potential. The key is to identify major accumulation periods during the correction, with the ‘Short-Term SOPR’ metric.”
The short-term SOPR metric jumped to nearly 1.1 on November 21, indicating that STH has started to realize profits, which could actually be good news for BTC.
“Historical patterns show that when short-term investors sell Bitcoin at a loss, it often leads to a recovery.”
Lookonchain data shows that five new wallets had removed $86.4 million worth of BTC from Binance before the price drop.
MicroStrategy, a company founded by Michael Saylor, announced another large purchase worth nearly $5.5 billion yesterday, bringing their total holdings to nearly 387,000 BTC.
