Despite many predictions that the price of Bitcoin (BTC) could soar to $120,000 before the end of the year, this coin has faced obstacles and is currently trading below $97,000. However, historical data shows that such pullbacks often provide opportunities for new Bitcoin buyers to accumulate.
If this pattern continues to hold, the price of Bitcoin could close the year at a higher level. This on-chain analysis reveals how this scenario could unfold.
Bitcoin Brings Rare Opportunity Again
The price of Bitcoin has dropped 12% in the past seven days, potentially due to increased selling pressure as the holiday season approaches.
This pressure is reflected in the sharp decline of the Coinbase Premium Index, a metric measuring buying and selling activity in the U.S. An increasing index indicates strong buying pressure, while a decrease suggests heightened selling.
Currently, this index indicates significant selling pressure. However, in previous cycles, strong sell-offs often attract new buyers looking to purchase Bitcoin at lower prices. If this pattern repeats, BTC could experience new accumulation and potentially rise higher.
Bitcoin's Coinbase Premium Index. Source: CryptoQuant
Interestingly, cryptocurrency analyst MAC_D also agrees with this viewpoint, noting that this digital currency may be about to undergo a bounce.
“History shows that this phenomenon is often temporary in bull markets, typically attracting new buyers who view this as an opportunity. While it’s uncertain that the price after this sharp decline is the bottom, if the bull market continues, a bottom could form soon, potentially leading to a bounce.” MAC_D emphasized on CryptoQuant.
Furthermore, the profit-taking ratio of Bitcoin holders also supports this view. On December 16, the on-chain trading volume in profit surpassed 250,000 BTC.
As of the time of writing, the value has dropped to $58K, indicating that the decline in Bitcoin's price has caused investors to hold onto their funds instead of liquidating assets. If this value continues to decrease, a BTC bounce may occur.
Daily On-chain Trading Volume of Bitcoin in Profit. Source: Santiment
BTC Price Forecast: Soon Returning Above $100,000
Based on the 4-hour chart, Bitcoin has found support at $92,888. As a result, the price has found stronger support at $95,871. However, the Awesome Oscillator (AO) indicator remains negative, suggesting bearish momentum.
Nevertheless, with green bars appearing, BTC could avoid another significant decline and trade higher. In that case, the price of Bitcoin could reach $104,299 in the short term. In an extremely favorable market condition, this value could rise to $108,386.
4-Hour Analysis of Bitcoin. Source: TradingView
Conversely, if the price drops below the aforementioned support level, this prediction may not be validated. If that happens, the price of Bitcoin could fall to $92,144.
