After Breaking $60k, Is Bitcoin Set for Correction Before New ATH? BTC Price Analysis
BTC has been showing strength lately, driven by anticipation of the futures-backed ETF and potential launch early next week. It closed at $61.6k with more than double the daily average volume on Coinbase, showing strong spot buying.
Possible Correction for BTC?
Although near-term price action has been very bullish with a strong breakout above $52.9k in the last 2 weeks, we need to approach the BTC ETF launch with caution. The risk of a near-term pullback is increasing because BTC has rallied 58% in just a few weeks in anticipation of the BTC ETF news.
In traditional markets, stocks tend to sell off leading up to or on the day of the anticipated announcement as traders take profit. Bitcoin is not immune to the “buy the rumor, sell the news” pattern as we have seen plenty of sell-offs, especially more recently with El Salvador’s adoption of BTC as legal tender.
The overall trend in fundamentals, technicals, and on-chain metrics remains firmly bullish looking at the mid to long-term view for BTC, but it’s important to be mindful of the near-term risks.
Open interest, funding rates, and the estimated leverage ratio are slightly elevated as BTC rallied significantly in the last few weeks. Although these levels are not as extreme as the ones in March to May 2021, there is always a risk of a liquidation event which could trigger a near-term pullback, especially if the BTC ETF turns into a sell the news event.
A sell-the-news event is actually healthy for the larger market structure because it helps make the rally towards all-time highs and higher more sustainable. Bull markets have multiple shake-outs, where the structure is formed, making the overall rally more sustainable.
In case this happens, near technical support is currently between $57.1k to $52.9k, previous levels of resistance now support. It is critical for BTC to hold these levels, form a higher low, and push back higher to reclaim $60k and retest previous all-time highs at $64.8k.
This looks like the most probable outcome as on-chain metrics continue to show no signs of aggressive distribution from long-term holders. This is a very bullish signal and indicates they are not interested in selling BTC even at $60k.
BTC miners continue to hold, maintaining reserves, indicating they still expect higher prices later this year. Spot exchange reserves are starting to trend lower for the past few days, as strong spot buying pushed BTC higher.
Long-Term Picture Bullish for Bitcoin Price
Although near-term caution should be taken after a large rally in BTC, the mid to long-term trend remains fully bullish and suggests any near-term sell-off is likely to be accumulated by strong hands, forming a higher low, leading to bullish continuation.
We continue to see signals of the risk on trade returning, a macro bullish catalyst for BTC for the cycle. The SPX has likely formed a double bottom, showing bullish divergence, and now reclaiming key technical levels. The dollar remains below resistance, with money continuing to flow out of long-term bonds, a sign of money rotating back into risk assets such as stocks and Bitcoin.
Despite a possible near-term correction, the strengthening fundamentals, technicals, on-chain, and macro conditions continue to favor BTC looking at the bull market cycle.