Bitcoin Price Dip: Weak Demand and Bearish Signals
Bitcoin (BTC) experienced a price fluctuation, reaching a high of $83,700 before facing resistance around $84,000 and dropping to $76,600 on March 11th. This price movement raises concerns about a potential further decline.
Weak Bitcoin Demand
Significant outflows from Bitcoin exchange-traded funds (ETFs), exceeding $1.5 billion in the last two weeks, have contributed to the price drop since late February. This, coupled with low apparent demand—the difference between Bitcoin production and changes in long-term inactive supply—suggests reduced risk appetite among investors.
Apparent demand, which was at 279,000 BTC on December 4th, plummeted to 10,000 BTC by February 26th. On February 27th, it even turned negative for the first time since September 2024, currently sitting at -93,700 BTC. Historical data suggests that such low demand levels can precede significant price drops. For example, a similar situation in July 2024 led to a 30% price drop.
It's important to note that this metric isn't always predictive. Negative apparent demand was observed in late May and October 2024, followed by price rallies of 7% and 73%, respectively.
Bearish Valuation Metrics
Several valuation metrics point toward a potential deeper correction. The Bitcoin bull-bear market cycle indicator, a momentum metric, sits at its most bearish level this cycle (-0.067), its lowest point since May 2023. The MVRV ratio Z-score also fell below its 365-day moving average, indicating a loss of upward momentum.
Historically, these valuation metrics at such low levels have foreshadowed either a sharp correction or the beginning of a bear market.
Bear Flag Pattern Hints at Further Drop
Technically, Bitcoin's price is forming a bear flag pattern, suggesting a possible correction. This pattern developed after Bitcoin's fall from $92,000 to $76,600 between March 6th and 11th. A breakdown of the flag's lower boundary, around $82,000, could trigger another price decline. The potential downside target, based on the bear flag's height, is approximately $68,400, a 17% drop from current levels. CryptoQuant analysts even predict a potential drop to $63,000 if the support zone between $75,000 and $78,000 fails to hold.
Disclaimer: This article does not provide financial advice. Conduct thorough research before making investment decisions.
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