Bitcoin’s price correction may not be over, on-chain data analysts warn

Analysts say a larger Bitcoin (BTC) price pullback or a consolidation period could occur. The two factors that could trigger more downside include increasing whale activity and short-term resistance.

Bitcoin whale watching

As Cointelegraph reported, Bitcoin crashed after it surpassed $19,400 across major exchanges. It dropped to below $16,400 before slightly recovering. But analysts foresee another possible drop incoming, especially if BTC does not rebound strongly in the near term.

Two key trends caused the recent Bitcoin correction. First, whales began to sell BTC at around $19,000, resulting in a downside volatility spike. Second, this relatively small price drop triggered a cascading wave of liquidations in an overleveraged futures market.

Ki Young Ju, the CEO of CryptoQuant, said that more corrections might come in the short term. The All Exchanges Inflow Mean indicator, for instance, is still hovering at a high level, suggesting that there is still a lot of selling pressure in the market. He said:

“More $BTC corrections might come. All Exchanges Inflow Mean (144-block MA) remains still high. In my opinion, we'll face some corrections/sideways this week and it will break $20k by December this year. I'll stack some sats a few days after.”

The timing of the sell-off from whales is noteworthy because it comes after BTC rejected a crucial resistance area. A pseudonymous trader known as “CryptoKea” has discussed the resistance level under the Mayer Multiple Price Bands since early November.

If history rhymes, the trader said that a bigger correction is likely. Such a trend would still be in line with previous bull cycles when BTC dropped 30% to 40% before continuing its rally. The trader said:

“The top of the bullish channel has done an excellent job in acting as short-term resistance, just as it did at this stage in prior bull markets. What happened historically afterwards? History never repeats, but often rhymes. These are the historic retrace multiples of the 200DMA of where price found support after it got rejected from the top of the bullish channel at around this stage of the bull. Current 200DMA is at $11.2k, increasing ~$40/day.”

In the near term, the key support for Bitcoin is found at $16,000. Below it, the next major support areas to watch are $14,000 and $13,500.

Golden Ratio Multiplier identifies key support levels

Philip Swift, the creator of Lookintobitcoin.com, said that the Golden Ratio Multiplier indicator showed a rejection of the 350-DMA resistance.

The Golden Ratio Multiplier identifies $16,000 and $13,000 as crucial support levels, similar to the Mayer Multiple. Swift said:

“Boom! Price firmly rejected by the 350dma x 2 yesterday when CT seemed certain we would race through it. This indicator is very much in play this cycle.”

Based on the two indicators, if Bitcoin rebounds and consolidates above $16,000, then a relief rally to the next areas of resistance is possible. If not, BTC is at risk of testing the $13,000 to $14,000 support range.