Bitcoin is currently trading at a pivotal level after losing key support zones, triggering concerns among investors regarding a potential deeper market correction. After spending over two weeks consolidating within a tight range, BTC experienced a sharp downturn, reaching lows around $112,000. This sudden decline has rattled market sentiment, with analysts cautioning of further downsides if demand fails to absorb the recent selling pressure.
However, not all indicators are signaling doom. Top analyst Axel Adler provided intriguing data illustrating that since the end of February 2024, the average Exchange Netflow on centralized exchanges (CEXs) has been predominantly negative. In fact, positive netflows have only been recorded on two occasions since that time, indicating that demand has outstripped supply consistently. This ongoing outflow of Bitcoin from exchanges points to strong accumulation trends, as investors prefer holding BTC long-term as opposed to selling.
According to Adler, the supply dynamics of Bitcoin continue to paint a bullish long-term picture, even amidst the recent price volatility. He notes that coins have consistently been withdrawn from exchanges for nearly a year and a half, significantly decreasing the available liquidity in the spot market. This persistent outflow has gradually created a supply shortage, acting as a key driver behind Bitcoin’s impressive growth over the preceding months.
This current accumulation trend sees a solid influx of investments from long-term holders and institutional players, steadily withdrawing BTC from exchanges. As liquidity diminishes, even moderate demand can lead to significant price movements, which has largely influenced Bitcoin’s upward trajectory.
Despite these bullish signs, Adler alerts that a growing challenge is brewing. As Bitcoin nears historically overvalued thresholds, selling pressure is starting to increase. Short-term holders and profit-takers are becoming increasingly active as BTC tests crucial psychological price levels. This tension between dwindling supply and an uptick in profit-taking could lead to heightened market volatility in the upcoming weeks.
Should the trend of accumulation remain more robust than supply inflows, the overarching uptrend may still persevere. Nonetheless, the signals of overvaluation suggest that a phase of consolidation or corrective moves is likely necessary to reset market conditions before Bitcoin can make another attempt to reach new highs.
Bitcoin is currently trading at $114,937, following a steep correction from its recent all-time high of $123,000. The daily chart indicates that BTC has lost the critical support level of $115,724, which now serves as immediate resistance. The price is trying to retest this level; however, the rejection from the 50-day moving average around $115,100 suggests that bulls are struggling to regain momentum.
The price structure showcases a clear breakdown from the tight range formed between $115K and $122K, followed by a lower high formation hinting at a reduction in bullish strength. Declining volume during this rebound attempt signals a lack of strong buying interest at current levels. The 100-day moving average at $108,100 serves as the next critical support if BTC fails to reclaim the $115K level.
On the upside, reclaiming the $115,724 level with strong volume would be a bullish indicator, potentially driving prices back toward the $120K-$122K resistance zone. However, a failure to break above this threshold could confirm a bearish retest, raising the likelihood of BTC revisiting the $112K-$110K support range in the forthcoming sessions.
