Bitcoin has recently experienced a notable correction, with its price dropping below the $64,000 mark and testing the $61,500 support level.
This pullback comes after the digital asset reached a new all-time high of $73,750 on March 14, 2024, sparking concerns among investors about the short-term outlook of the market.
TLDR
Bitcoin price has experienced a significant correction, dropping below $64,000 and testing the $61,500 support level.
The short-term outlook suggests a potential deeper correction toward $58,000, but long-term holders maintain firm conviction.
The Net Unrealized Profit/Loss (NUPL) metric rarely stays above +0.6 for an extended period, and a reading above this level is usually followed by a sharp price correction.
Despite the pullback, Bitcoin continues to leave exchanges, indicating accumulation by investors.
If the market holds the Bitcoin price above the crucial support level of $61,025, bulls may regain momentum and attempt to test new highs, while failing to do so could lead to further price drops.
The correction, which saw Bitcoin lose approximately 17% of its value within the past seven days, marks the biggest price drop of the year. This sudden shift in market sentiment has left many investors questioning whether now is the right time to buy Bitcoin or if further losses are on the horizon.
One key metric that analysts are closely monitoring is the Net Unrealized Profit/Loss (NUPL), which helps identify when investors are in profit. Historically, the NUPL rarely stays above the +0.6 level for an extended period, and readings above this threshold are typically followed by sharp price corrections.
However, during bull runs, this trend can be bucked, as evidenced by the period from December 2020 to April 2021, when the NUPL consistently remained above +0.6 as Bitcoin rallied from $19,000 to $60,000.
Bitcoin Price, Data from Coingecko.
Despite the recent pullback, there are signs of accumulation among investors. Data from CryptoQuant shows that more Bitcoin is leaving centralized exchanges than entering them, even as prices began to retreat from the $73,000 mark.
This behavior suggests that long-term holders are maintaining their conviction in the digital asset and are not panicking in the face of short-term volatility.
The spent output age bands, another metric that provides insight into investor behavior, reveals that short-term holders (those holding BTC for 1-3 months) booked profits during the recent price spikes in late February and early March.
However, long-term holders, whose coin age is a year or longer, have not relinquished their assets en masse, demonstrating faith in Bitcoin’s long-term potential.
Looking ahead, the short-term outlook for Bitcoin remains uncertain. If the market can hold the price above the crucial support level of $61,025, bulls may regain momentum and attempt to test the upper resistance level of $68,519.
Maintaining this price level could set the stage for Bitcoin to surpass its previous all-time high of $73,754 in the coming weeks. Conversely, if the bulls fail to regain power and the price falls below the $61,025 support, the market could experience further losses, potentially testing the $56,880 level.
While the current correction may be unsettling for some investors, it is essential to remember that short-term price volatility is a common feature of the cryptocurrency market. Long-term investors should focus on the underlying fundamentals and adoption of Bitcoin rather than being swayed by temporary market fluctuations.
As the market continues to mature and institutional interest grows, Bitcoin’s long-term prospects remain exciting, despite a short-term correction.
The post Why is Bitcoin Down? BTC Experiences 17% Correction Amid Market Volatility, Time to Buy? appeared first on Blockonomi.