Bitcoin (BTC) reached a new all-time high of $72,800 on March 11, demonstrating the strength of the crypto market. BTC started the day at $69,032 and increased by 5.7% to reach its highest point of the year. However, this impressive performance has raised concerns about a potential sell-off due to profit-booking at these elevated levels.
Several technical and market indicators suggest that a correction in BTC’s price may occur in the short term. The TD sequential indicator has signaled a sell signal on the 12-hour timeframe, as observed by independent analyst Ali. The chart provided by Ali shows the sell signal, indicating a possible drop of up to 3.5% to around $70,000.
Furthermore, there are signs of “overheating” in the Bitcoin market. Since the debut of spot Bitcoin ETFs on January 11, these investment funds have attracted significant capital, with assets under management reaching $55.3 billion on March 11. However, this influx of capital has led to overheated signals, according to analysts at CryptoQuant. They warn that despite the new all-time highs, BTC could experience major corrections soon.
One of the metrics supporting this view is the realized profits of miners, which reached the highest levels since December 2023. Additionally, traders’ unrealized profit margins have reached 57%, historically associated with upcoming corrections as traders book profits. Short-term holders have also started selling at the highest profit margins since February 2021, indicating increased selling pressure.
Data from IntoTheBlock shows that 100% of Bitcoin holders are currently in profit, which may increase the likelihood of profit-booking sell-offs in the short term.
The overbought conditions of Bitcoin’s Relative Strength Index (RSI) on multiple timeframes also suggest a potential correction. Coinglass’s heatmap and TradingView’s data confirm the overbought conditions, with RSI values exceeding the threshold in four out of five timeframes.
Moreover, the Crypto Fear and Greed Index currently stands at 82, indicating “extreme greed” conditions. When investors become overly greedy, market corrections are likely to occur. The last time the index was above 80 was during the 2021 bull market, followed by a significant drop in BTC’s price.
While these indicators caution market participants to manage risks, it is important to note that RSI conditions do not guarantee a trend reversal. Crypto prices are highly volatile, and Bitcoin could continue to rally due to increasing demand and the upcoming supply halving.
It is essential for readers to conduct their own research and make informed decisions as this article does not provide investment advice or recommendations.