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HomeNewsBitcoin Bulls Battle as Price Dips 5% – Will $44,000 Be the...

Bitcoin Bulls Battle as Price Dips 5% – Will $44,000 Be the Turning Point?

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  • Bitcoin experienced a significant price correction after rallying above $40,000, with on-chain data suggesting an ‘overheating’ market.
  • Despite the correction, Bitcoin shows strength with potential resistance around $44,000 and indicators of sustained bullish trends.

In the dynamic world of cryptocurrencies, Bitcoin has recently undergone a noteworthy price correction, signaling a possible cooling-off period after its rally above the $40,000 mark. This development follows months of consistent growth, bringing a much-needed respite to the overheated market.

On-Chain Data Highlights Market Overextension

Bitcoin’s sharp decline from $44,034 to $41,649 within a span of six hours has brought to light the market’s overextended state. Julio Moreno, head of research at CryptoQuant, noted that the flagship cryptocurrency was ‘overheating’ post the recent rally. Furthermore, Lookintobitcoin’s data aligns with this assessment, indicating that Bitcoin’s price has hit its golden ratio multiplier near-term target. This Crosby Ratio underscores the cryptocurrency’s over-extended levels, necessitating a correction or slowdown.

The Golden Ratio Multiplier Effect

The golden ratio multiplier, an indicator assessing Bitcoin’s adoption curve and market cycles, suggests that Bitcoin’s price has reached a state of buyer exhaustion above $40,000. This is corroborated by the relative strength index (RSI), which has indicated an overbought condition since December 5.

Facing Resistance at the $44,000 Zone

Bitcoin’s current market correction can be attributed to the significant resistance encountered around the $44,000 supply zone. The Lookintobitcoin golden ratio multiplier and IntoTheBlock’s

“in/out of the money around price”

(IOMAP) model both highlight this critical resistance level, where approximately 585.77 BTC was previously bought by around 1.43 million addresses.

Prospects of a Healthy Correction

Despite the immediate downturn, this correction phase could serve as a bear trap in an overarching bullish trend observed over recent months. Santiment’s data on Bitcoin’s exchange outflows suggests a bullish sentiment, with investors leaning more towards holding than selling. This implies that the current dip could present an opportunity for traders to buy at lower prices before a potential continuation of the upward trend.

Technical Indicators Suggest Continued Upside

From a technical perspective, Bitcoin’s positioning above major moving averages and the MACD indicator’s positive region suggests a favorable market for bulls. Should Bitcoin successfully surpass the $44,000 resistance level, it could pave the way towards the $50,000 mark, particularly in light of upcoming events such as the SEC’s decision on Bitcoin ETF applications and the anticipated Bitcoin halving in 2024.

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Ralf
Ralf
Ralf Klein is a computer engineer specializing in database technology, and as such, he was immediately fascinated by the possibilities of blockchain when he first heard about it, especially since this distributed, tamper-proof technology can be the foundation for much more than just cryptocurrencies. At ETHNews, he translates the articles of his English-speaking colleagues for the German readers. Business Email: info@ethnews.com Phone: +49 160 92211628
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