Is Bitcoin price going to crash again?
Bitcoin (BTC) surged to $83,700 during the early Asian hours on March 12, following a dip to $76,600 on March 11. This fluctuation, marked by a minor uptick in market sentiment, raises uncertainties regarding the cryptocurrency’s path in the coming days, particularly as it faces resistance near the $84,000 threshold.
### Demand for Bitcoin Remains Weak
The downturn in Bitcoin’s price has been significantly influenced by substantial outflows from spot Bitcoin exchange-traded funds (ETFs), totaling over $1.5 billion in the last fortnight. These movements indicate a cautious market environment as investor appetite for risk diminishes, as corroborated by data from the market intelligence firm CryptoQuant.
Key insights highlight the dynamics of apparent demand, defined as the gap between production (BTC mining issuance) and changes in inventory (unmoved supply over a year):
– An apparent demand decline occurs when production surpasses inventory decrease.
– Between November and December 2024, Bitcoin’s apparent demand plummeted from 279,000 BTC on December 4 to a scant 10,000 BTC by February 26.
– As of February 27, this metric turned negative for the first time since September 2024, currently marking a staggering -93,700 BTC.
– If this trend persists, further price declines may be imminent, drawing parallels to a significant drop observed in July 2024.
### Bitcoin Valuation Metrics Hint at Deeper Correction
Data sourced from Cointelegraph Markets Pro and TradingView reveal that Bitcoin’s current price sits 7% above a four-month low of $76,600. Despite this uptick, several valuation indicators suggest the possibility of a deeper correction.
– The Bitcoin bull-bear market cycle indicator stands at its most bearish level of the current cycle, reflecting a negative value of -0.067, the lowest since May 2023 when Bitcoin began a recovery phase.
– Simultaneously, the MVRV ratio Z-score has dipped below its 365-day moving average, suggesting that Bitcoin is losing upward momentum. Historically, such valuation levels typically presage sharp corrections or the genesis of a bear market.
### Bear Flag Formation Indicates Potential Price Drop to $68,400
From a technical standpoint, Bitcoin’s price is navigating a bearish continuation pattern known as a bear flag, which could spell further downside risk if established support levels fail to hold.
– Following a decline from $92,000 to $76,600 between March 6 and March 11, Bitcoin’s current trading setup reflects a consolidation within this bear flag, approaching critical support at the lower boundary around $82,000.
– Should this support cave in, a subsequent price drop could target approximately $68,400, indicating a potential 17% descent from current levels.
– Additionally, analysts from CryptoQuant caution that slipping below the current support zone of $75,000 to $78,000 might further escalate losses, potentially dragging Bitcoin down to $63,000.
In summary, the market landscape for Bitcoin is increasingly fraught with bearish signals, with indicators pointing toward the possibility of a significant price retraction. As traders absorb this data, the focus will remain on Bitcoin’s resilience amidst fluctuating demand and market sentiment.
