Data Suggests Bitcoin Is Far From Overheated – Analyst Shares Key Metrics To Monitor

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Right now, Bitcoin is being tested near the $95K level, which is an important benchmark that could ignite the next surge in prices. This period of consolidation has caused some unease among investors, who fear a larger correction, with some going as far as suggesting that Bitcoin might have already reached its peak. However, key indicators suggest a more hopeful outlook.

CryptoQuant analyst Axel Adler recently posted an illuminating graph illustrating market sentiment and price trends. This visual aid provides useful perspectives on the current market situation. According to Adler’s analysis, the market could potentially overheat if the index displayed in the chart reaches the 95th percentile – a level that typically indicates the start of a correction phase. Fortunately, at present, the market is significantly below this mark, implying there may be more potential for upward movement before encountering significant resistance.

This assessment aligns with the general perspective of long-term Bitcoin investors, who consider the present consolidation as a beneficial pause in Bitcoin’s continuous rise. As Bitcoin maintains its position above crucial support points, attention is focused on its capacity to surpass $95K once more and reestablish the psychological $100K threshold. This could pave the way for another substantial upward trend.

Bitcoin Awaiting Decisive Move

Over the past few weeks, Bitcoin has been holding steady below the significant $100,000 threshold. However, it’s currently experiencing robust buying interest above the $92,000 point, indicating its ability to withstand market turbulence. Experts are keeping a close eye on this level as Bitcoin nears a crucial crossroads, anticipating a clear directional move. Whether the cost will surpass $100,000 or fall below $90,000 is yet uncertain; however, it’s clear that investors should brace themselves for intense market swings in the near future.

More recently, Adler provided valuable information and breakdowns, emphasizing important indicators to monitor throughout the year to forecast market fluctuations. Specifically, Adler pointed out that the market will become excessively heated when the Market Sentiment and Price Correlation index surpasses the 95th percentile. In the past, this point has indicated the start of significant corrections, making it a vital benchmark to keep an eye on.

Adler underscores three significant factors to keep an eye on as we get close to a critical point: Sales by long-term investors (LTHs), decreased flows in ETFs, and the way investors are handling MicroStrategy shares. When these signs align, they usually signal the start of a corrective phase. As it stands, Bitcoin is currently in a stable position, with robust demand keeping its price afloat, but the next significant action could shape the rest of the year’s trend.

Critical Levels To Watch

At present, Bitcoin is being traded at approximately $94,500. It’s maintaining its position above crucial support, but it’s facing obstacles to revive bullish momentum. To seize control, initially regaining the $95,000 mark is essential. Nevertheless, this isn’t enough. In order to confirm a sustained upward trend, Bitcoin needs to surpass the $98,000 and $100,000 thresholds in the upcoming days.

Reaching and surpassing the $100,000 level is a significant hurdle, both psychologically and technically. Maintaining a position above this threshold for an extended period is crucial to validate the upward trend. Consistently staying above $100,000 would instill confidence in market participants, implying the persistence of the bullish pattern.

Conversely, if Bitcoin can’t push beyond $95,000 and fails to regain the $98,000 and $100,000 levels, there’s a growing possibility it could dip below the $92,000 support. Such a situation might lead to more significant corrections, possibly aiming for the $85,000 potential resistance area.

Over the coming days, Bitcoin’s (BTC) direction could significantly shape its future trajectory. If buyers manage to regain dominance, prices might rise, but if sellers continue to drive down the market, we could see further declines shaping the following weeks.

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2025-01-12 11:11