Bitcoin (BTC) price has recovered more than 22% two weeks after bottoming at $52,546, reaching around $64,121 on September 20. Bitcoin price has now dropped to $62,761, with many technical and onchain indicators warning about the strength of the recent rally.
Factors That Could Push Bitcoin Price Down
85% of Bitcoin Investors Are Currently Profitable
Bitcoinâs recent move above $62,000 pushed BTC above the strike price of short-term holders, as this group of traders turned some of their unrealized losses into profits.
A chart shared by market analytics firm Into The Cryptoverse shows that only 14.2% of Bitcoin investors were still losing money as the price hovered around $62,600 on September 20, while more than 85% of the supply was in profit.
The Profitable and Losing Supply Ratio evaluates whether the total number of unspent transaction outputs (UTXOs) are profitable or not by comparing the price when they were last moved and the current price.
If Bitcoin continues to rise from its current levels, more investors will be in profit. A large number of holders in profit is often seen as a sign of an overheated market, which often leads to or accompanies a price correction.
Due to this onchain signal, Bitcoin price is likely to drop in the coming days as investors decide to take profits.
Bitcoin futures open interest skyrockets
In August, Bitcoin futures open interest surged, peaking at $34.72 billion on August 27. However, the price failed to break the $65,000 resistance level and subsequently fell 20% within 10 days.
Similarly, with the recent surge above $64,000, open interest has increased 22.7% since September 8 to a four-week high of $34.72 billion on September 20, according to data from Coinglass.
With the current strong demand for BTC futures, investors are considering the possibility of a price drop similar to that seen in late August.
Some traders say the rise in Bitcoin futures open interest shows excessive borrowing.
Large open interest can increase price volatility, especially when a trader holds multiple positions and decides to suddenly change strategy.
It can also influence the overall sentiment of traders when using OI as a signal to decide whether to hold or sell a crypto asset.
Bitcoin Price Hits Resistance at $64,000
Technically, Bitcoin price is facing resistance at $64,000. When the price was rejected from this level on August 25, it fell 17.5% to $52,546, indicating that bears are aggressively defending this area. Bitcoin bulls need to create a decisive daily candle close above this level to sustain the recovery.
Conversely, if $66,000 fails to turn into support, the price could fall further, with liquidation of long positions accompanying the pullback to $62,000.
Data from Coinglass shows a wall of sell orders building above the $64,000 level, highlighting the importance of this resistance area.
