Key Points
- Bitcoin has seen a decline of over 7% in the past week, with predictions of a significant correction if it falls below $56k.
- The market sentiment and on-chain activity suggest a bearish phase and potential further price correction.
Bitcoin [BTC], the largest cryptocurrency by market capitalization, has experienced a significant decrease in the past week. At the time of writing, BTC was trading at $59,129, marking a 7% decrease.
The month of August has been quite volatile for this cryptocurrency. BTC dropped to $49,500 earlier in the month, only to recover and later reach a local high of over $65k. However, it lost these gains and fell below $60k.
Market Sentiment and Predictions
Many are unsure about the extent of the next wave of corrections. According to Cryptoquant analyst Julio Moreno, if Bitcoin’s price falls below $56k, a strong decline may occur. Moreno’s analysis suggests that $56k is a critical support level. If the price falls below this, the crypto could significantly weaken.
The Bitcoin market cycle indicator has turned bearish again, implying the risk of further correction. If the bulls don’t reclaim the market, the bear phase could persist.
Insights from BTC’s Charts
While Moreno’s analysis provides possible future price movements, it’s crucial to consider what other market indicators suggest. Bitcoin’s NUPL (Net unrealized profit/loss) has declined over the past week, indicating a shift from unrealized profit to unrealized loss. This could mean that the market is leaning towards bearish and might result in selling pressure.
Furthermore, BTC’s negative adjusted price DAA divergence of -44.31 suggests a decrease in on-chain activity based on current prices. This could result in price correction as prices adjust to the lower level of on-chain activity.
The MVRV ratio for BTC has remained at 1.8 over the past week, indicating that participants are in profit. If BTC holders decide to sell at this rate to realize their profits, it would lead to further price correction. If the selling pressure increases, the market could experience a pullback.
As per Cryptoquant analyst Julio Moreno’s suggestion, BTC is in the bear phase. If the current market conditions persist, Bitcoin could be positioned for a bigger correction. If the price falls below the $56k level, BTC could drop below $50k to the critical support of $49k.
