Bitcoin (BTC) Price Likely to Experience Brief Correction After Hitting $65,000

After recently surpassing the $65,000 threshold, Bitcoin’s (BTC) price might have encountered a barrier. Despite signaling strong bullish momentum, historical patterns suggest that BTC could retreat before resuming its upward momentum.

This analysis of on-chain data underscores the indicators supporting this prediction and outlines what investors can anticipate in the short term.

Bitcoin’s surge to $65,497 contradicts the expectations at the start of September when many anticipated a bearish month. However, based on the price Daily Active Addresses (DAA) divergence, BTC could experience a drop before attempting to retest $70,000.

The price DAA measures whether user engagement increases along with a coin’s value. A simultaneous increase in price and active addresses is a buy signal, potentially leading to an increase in the cryptocurrency’s value.

At the current time, Bitcoin’s price DAA had dropped to -54.89%. This decrease indicates a reduction in market participants’ interaction with the coin, suggesting that the recent uptrend might be weak and serving as a sell signal.

Additionally, the coin’s performance has affected holders’ profitability. On September 16, 79.92% of Bitcoin holders were in a profitable position. However, according to the Historical In/Out of Money (HIOM) metric, which compares addresses making money at different price levels, 91.97% are now in profit.

Historically, when the ratio reaches such levels, some holders tend to take profits, potentially leading to a decrease in Bitcoin’s price. For example, a similar scenario occurred in July when the percentage of holders in profits was approximately 93%.

A few days later, it declined to 78%. Another instance occurred on August 25 when the percentage stood at 88.35%, and the subsequent decline in Bitcoin price led to 76.23%. Thus, if history repeats itself, BTC could be poised for a short-term downturn.

While a positive return is expected, the daily chart indicates that Bitcoin’s attempt to breach $69,000 has faced resistance, suggesting a challenge to bullish dominance.

If the price falls below $65,000, the $65,838 region will present significant resistance. However, buyers are likely to attempt to prevent BTC from dropping below the support level at $63,093. The chart below illustrates the potential failure of this defense.