Despite the surge in Bitcoin (BTC) price over the past 24 hours, key market indicators are flashing cautionary signals, suggesting that the coin could face significant hurdles in reaching the $70,000 mark. This development runs counter to investors’ expectations for the coin this month.
While Bitcoin price has once again broken above the $63K level, this analysis reveals why investors should take these warning signs seriously.
On-chain metrics raise red flags for Bitcoin
A key metric that supports a pullback in Bitcoin’s price is the Network Value to Transactions (NVT) ratio. The NVT ratio shows whether the market value is growing faster than the cryptocurrency’s transaction volume.
When the NVT ratio decreases, transaction volume is growing faster than market value. In most cases, this is positive for the price. On the other hand, an increase in the NVT ratio indicates that the Bitcoin network is overextended, as market value is outpacing volume.
At the time of writing, data from Glassnode shows that the ratio has increased recently. This suggests a possible overvaluation, indicating a potential short-term correction in Bitcoin’s price.
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Bitcoin NVT Ratio. Source: Glassnode
This perspective is reinforced by the Short-Term Holders Spent Exit Profit Ratio (STH-SOPR). This metric measures the behavior of short-term investors, indicating whether they are selling at a profit or a loss.
When the STH-SOPR is below 1, investors are selling at a loss. Conversely, when the metric is below 1, investors are selling at a profit. However, as of this writing, the ratio is exactly 1, suggesting that the volume sold at a loss and at a profit is equal.
Considering the impact on Bitcoin’s price, this development implies that the coin could continue to move sideways. However, a potential Bitcoin rally towards $70,000 could be unlikely.
Bitcoin Short-Term Holders SOPR. Source: CryptoQuant
Price Prediction: Could the Coin Drop Below $60K?
On the daily chart, Bitcoin’s current price is $62,856, up from 24 hours ago. However, the Money Flow Index (MFI) shows that capital flowing into the cryptocurrency has slowed.
The MFI is a technical indicator that uses price and volume to gauge the level of buying and selling pressure in the market. When the MFI increases, more liquidity is flowing in, and the price may rise.
As the indicator’s reading has fallen, it implies that investors are taking recent profits, which could halt the price increase. If this remains the case, BTC’s price could decline to $59,978.
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Bitcoin daily price analysis. Source: TradingView
However, if investors stop distributing and start accumulating in large numbers, the coin could appreciate towards $66,527 and eventually $70,000.
The article Understand the difficult path that Bitcoin (BTC) will have to reach US$ 70 thousand was first seen on BeInCrypto Brazil.
