Bitcoin (BTC) is currently undergoing a significant correction phase after experiencing a strong price rally in 2024. The BTC/USD pair has dropped by approximately 13.5% from its year-to-date and all-time high of nearly $74,000.
The ongoing decline in Bitcoin’s price is reminiscent of previous bull market corrections, which have seen prices decrease by 20-40%. This raises the possibility of similar downturns occurring during the 2024 bull market.
Bitcoin’s price explosion has left the market in an overbought state. The weekly Relative Strength Index (RSI) stood at around 77 as of March 22, indicating overbought conditions. Historically, RSI levels above 70 have preceded strong price corrections towards the 50-week exponential moving average (50-week EMA). The Bitcoin chart from the 2020-2021 bull run shows a similar downturn.
In 2024, Bitcoin’s price is expected to follow an upward trajectory, targeting the ascending trendline resistance at around $84,000 by April or May. However, it is likely to pull back towards its 50-week EMA near $40,000 after reaching this potential peak. This suggests a corrective phase similar to that of 2020. In other words, there is a risk of a 35% drop in BTC’s price by June from the current price levels of around $64,350.
Further indications of a potential price crash come from Bitcoin’s Net Unrealized Profit/Loss (NUPL) data. An NUPL reading above zero indicates investors are in profit, and an increasing trend suggests more investors are becoming profitable. The NUPL reached 0.64 earlier this month, a reading that has historically preceded rising profit-taking sentiment and sharp BTC price drops.
Analyst Rekt Capital suggests that Bitcoin is currently in a “Danger Zone” following its recent price drop. This area, highlighted in red on the chart, is significant as it aligns with the region where Bitcoin has historically experienced retracements before its halving events. Rekt Capital anticipates BTC’s price to drop towards the $40,000-42,000 range before the halving in April.
On the other hand, popular trader Aksel Kibar’s analysis is relatively bullish, predicting that the BTC price will stabilize around $57,500. This downside target coincides with the upper trendline of Bitcoin’s previous ascending channel trend.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and analysis before making any investment or trading decisions.