Bitcoin Crash: What Lies Ahead for its Price?

Bitcoin is currently going through a significant correction phase after experiencing a strong rally in 2024. The BTC/USD pair has dropped by around 13.5% from its year-to-date high of nearly $74,000. This decline in price is likely a correction in the bull market, allowing the market to adjust and consolidate its gains before potentially moving higher again. Similar corrections have been observed in previous bull markets, with prices declining by 20-40%, indicating the possibility of a similar downturn in 2024.

Bitcoin’s recent price surge has left its market in an overbought state. The weekly Relative Strength Index (RSI) for Bitcoin stood at approximately 77 on March 22. An RSI above 70 usually suggests overbought conditions, indicating that the market may see a price correction as traders sell off their holdings. Historical data shows that when the weekly RSI is above 70, strong price corrections towards the 50-week exponential moving average (EMA) have occurred. This can be seen in the Bitcoin chart during the 2020-2021 bull run.

The price trajectory of Bitcoin in 2024 seems to be heading towards an upward trend, targeting an ascending trendline resistance around $84,000 by April or May. After reaching this potential peak, there is a significant possibility of a pullback towards the 50-week EMA, which is around $40,000. This suggests a similar correction phase to what occurred in 2020. In other words, there is a risk of a 35% drop in Bitcoin’s price by June, based on the current price levels of around $64,350.

The Net Unrealized Profit/Loss (NUPL) data for Bitcoin also indicates a potential price crash. NUPL represents the difference between the market cap and realized cap divided by the market cap. A reading above zero indicates that investors are in profit. An increasing trend in NUPL suggests more investors are starting to make a profit, which leads to increased sell pressure. In recent weeks, Bitcoin’s NUPL reached 0.64, a level that has historically preceded sharp price drops.

Bitcoin analysts have differing opinions on the future price of Bitcoin. Analyst Rekt Capital suggests that Bitcoin is in a “Danger Zone” following its recent price drop. This zone, highlighted in red on the chart, aligns with the region where Bitcoin has previously experienced retracements before halving events. Rekt Capital anticipates that the price of BTC will drop towards the $40,000-42,000 range before the halving in April. Popular trader Aksel Kibar predicts that Bitcoin’s price will stabilize around $57,500, which aligns with the upper trendline of its previous ascending channel trend.