- Following a remarkable eight-week surge that saw Bitcoin (BTC) soar from $27,200 to over $44,000, the cryptocurrency is now potentially headed for a significant drop.
- BTC has stayed in the $41,500–$43,000 area ever since it recovered from the panic selloff as investors moved huge amounts of BTC away from exchanges and trading wallets, according to the on-chain data trail.
- Technical data points to the crucial resistance that might lead to an end of the tremendous BTC rally in the past 8 weeks.
There have been more than 249K unconfirmed transactions in the Bitcoin mempool, causing considerable congestion. Since Ordinals account for more than half of all daily network transactions, the increase in inscriptions is one factor contributing to the congestion.
On-chain fees have also increased to an average of $25-$30 per transaction. According to Coinglass data, there have been more than $103M in token-tracked futures liquidations in the last 12 hours, with $95M of those liquidations being long bets. Further, $33M in bitcoin positions were liquidated out of the $103.5M in total liquidations.
Twitter analyst, Michael van de Poppe commented on Twitter that BTC might see further bullish action before correcting and an altcoin rally could begin soon.
Bitcoin has managed to recapture the $42,000 level, and the hype around ordinals may be the catalyst for another push up towards $45,000 before the new year.
BTC 5-day chart. Source: Trading View
On the 5-day chart, BTC is currently trading at $41,173 and the RSI is currently at 58.24 indicating an overbought zone for Bitcoin. The RSI is a technical indicator that is measured on a scale from 0 to 100. RSI values above 70 indicate that an asset may be overbought, suggesting a potential reversal or pullback in price.
BTC 5-year chart. Source: Trading View
The historical 5-year Bollinger band chart for Bitcoin displays a strong period of consolidation for Bitcoin between July 2022 to July 2023. Bollinger Bands expand and contract based on market volatility and wide bands indicate high volatility, while narrow bands suggest low volatility.
Strong hodlers will probably accumulate more cryptocurrencies once the initial tremor passes because the macro climate is still supportive to risky assets. The Federal Reserve’s 2024 decision to halt rate rises and potentially lower interest rates will raise demand for cryptocurrency-related items.
But nothing rises in a straight line including cryptocurrencies! Traders frequently take winnings and turn their attention to other altcoins following significant price spikes. When Bitcoin slows down, traders will probably focus on altcoins.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
