Key Points

Bitcoin [BTC] recovers, trading above $71k due to reduced selling pressure and increased accumulation.
Despite optimistic metrics, Bitcoin’s Network Value to Transactions Ratio hints at possible overvaluation.

After a period of volatility, Bitcoin [BTC] experienced a recovery, pushing its value beyond the $70k mark. This recovery came after a significant price drop due to substantial profit realizations, which totaled over $2.7 billion since April 2nd.

Factors Behind BTC’s Recovery

Bitcoin’s recovery can be attributed to several factors. According to an analysis by IT Tech, a CryptoQuant analyst, the decrease in selling pressure played a significant role. This was due to short-term holders ceasing to realize losses on the price correction.

Bitcoin’s strong correlation with Tether [USDT] also played a role. Recently, new USDTs were minted, which may have contributed to Bitcoin’s recovery. Additionally, there was a significant inflow of Bitcoin to accumulation addresses, pushing their reserves to an all-time high.

Potential Price Correction

Despite Bitcoin’s price climbing above $71k, there were indicators of a potential price correction. AMBCrypto’s review of CryptoQuant’s data showed high buying pressure on Bitcoin, with its net deposit on exchanges being low compared to the last seven-day average.

However, Bitcoin’s Network Value to Transactions Ratio registered a sharp increase, suggesting the asset may be overvalued. This could potentially hint at a price drop. Additionally, the Money Flow Index (MFI) supported this bearish outlook with a sharp downtick.