Bitcoin Remains Strong Despite Price Correction - Bulls Eyeing $44,000 Breakout

According to on-chain data, it is observed that the price of Bitcoin was considered to be 'over-extended.' As a result, it experienced a significant drop of up to 7.2%, reaching a low of $40,300 on Coinbase. This decline sparked discussions among analysts.

Within the past 24 hours, the price of Bitcoin witnessed a 5% decline, reaching a value of $41,645 on December 11th.

Although there was a sudden correction, Bitcoin's resilience is evident based on technical indicators and on-chain data. Bulls are actively engaged in pushing the price above the $44,000 level.

Analyzing the on-chain data reveals that Bitcoin's price has been deemed 'over-extended.' This resulted in a significant drop of 7.2%, with the price reaching as low as $40,300 on Coinbase. Consequently, analysts have engaged in discussions surrounding this downward movement.

Julio Moreno, the head of research at CryptoQuant, an on-chain analytics firm, highlighted that Bitcoin's price had become 'overheated' after its recent surge above the psychologically significant $40,000 level.

Additional findings from Lookintobitcoin, an on-chain data analysis firm, indicate indications of exhaustion among bullish investors.

As stated in their December 2023 report, Bitcoin's price has achieved its near-term target based on the golden ratio multiplier, a metric derived from the Crosby Ratio.

This observation indicates that Bitcoin's near-term price has become 'over-extended,' indicating the need for a correction or a slowdown. Essentially, Bitcoin has entered overbought conditions above the $40,000 level, as indicated by its relative strength index (RSI) signaling overbought status since December 5th.

This early warning served as an indication of a possible decrease in buying pressure, as traders started to recognize the rally's loss of momentum and decided to take profits. The main obstacle for Bitcoin's price continues to be the strong resistance present at the $44,000 supply zone.

Based on the Lookintobitcoin golden ratio multiplier indicator, it was observed that the target of 1.6 multiplier had been reached in this area. Bitcoin has encountered difficulties in successfully surpassing this level over the past week, facing significant rejection.

The strength of the resistance at $44,000 is emphasized by on-chain data obtained from IntoTheBlock's 'in/out of the money around price' (IOMAP) model.

According to the data, the price range of $43,346-$44,627 is significant as approximately 585.77 BTC was acquired by around 1.43 million addresses in that range.

Any attempts to surpass this level would likely face strong selling pressure from this group of sellers. However, it is important to note that this ongoing correction could be seen as a bear trap within the broader bullish trend that has been established over the past few months.

According to data provided by Santiment, a crypto market intelligence firm, Bitcoin's exchange outflows are increasing, with the BTC exchange flow balance now standing at -347.

This negative reading suggests that the outflows of Bitcoin from exchanges are exceeding the inflows, indicating that investors are more inclined to hold rather than sell. This sentiment is generally considered bullish.

From a technical standpoint, Bitcoin has maintained its position above all significant moving averages, and these indicators have continued to show upward trends, establishing strong support levels.

The moving average convergence divergence (MACD) indicator also remains in positive territory, with the MACD line positioned above the signal line, favoring further upward movement in Bitcoin’s price. Considering the current situation, it is highly probable that Bitcoin's price will continue to increase, with buyers aiming for a breakout above the $44,000 level.

A successful break beyond this level could propel Bitcoin toward the psychological milestone of $50,000, either in early 2024 when the United States Securities and Exchange Commission is expected to decide on spot Bitcoin exchange-traded fund applications or during the next Bitcoin halving event.