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- Onchain data trend shows why Bitcoin price has formed resistance at the $89,000 level.
- BTC whales are visibly determining growth trajectory as many positions for profit taking.
This week started quite positively for Bitcoin (BTC), but investors are advised to remain cautious in the days ahead. The leading cryptocurrency broke through the weekend’s stagnation, with its price hitting $89,000. This price soon became immediate resistance, as BTC corrected sharply to $86,000 as of this writing.
Here are the four possible reasons behind the correction and why Bitcoin bulls should remain cautious.
Bitcoin RSI in Overbought Territory
On Monday, Bitcoin’s Relative Strength Index (RSI) indicator entered an overbought territory above 70. The RSI indicator measures the speed and magnitude of recent price changes, helping traders identify potential overbought or oversold conditions.
An RSI value above 70 signals that an asset is overbought and due for correction. In a Monday’s X post, popular on-chain analyst Ali Martinez pointed out what an overbought state means for Bitcoin.
The analyst posted a chart that showed Bitcoin in a pitiful state the last six times the RSI hit overbought territory. Based on the analyst’s perspective, Bitcoin could continue to see more decline, with the RSI already above 70.
TD Sequential Indicator Suggests Profit-Taking
The TD Sequential is another technical indicator likely behind Bitcoin’s rejection at $89,000. This indicator, which aims to identify when a trend is losing steam, supports the RSI.
For Bitcoin, the TD Sequential metric suggests a short-term top after the recent rally toward $89,000, hinting at potential profit-taking ahead.
Besides the RSI and TD Sequential indicators, BTC has built resistance around the $89,000 mark. This resistance formed when the 50-day moving average and the descending trending from Bitcoin’s ATH converged. Martinez said the convergence hindered Bitcoin’s move toward $90,000 and $100,000.
However, as we discussed earlier, if Bitcoin manages to break above $87,500, it may face resistance at $90,000.
BTC Whale Interaction
Another possible reason for the Bitcoin correction is the emergence of large investors, often referred to as whales. Ali Martinez spotlighted data from the on-chain analytics platform Santiment showing whales selling their BTC stash.
The analyst said that investors have sold over 20,000 BTC, valued at about $1.8 billion at prices from the local peak. These investors sold their coins during the recent price surge in Bitcoin to accumulate more profits.
Recall that whales accumulated Bitcoin when the price tumbled last month. With the price up slightly, the whales have changed their strategy, at least for the short term.
Moreover, Arkham Intelligence also pointed out a huge BTC movement from the once-dominant Bitcoin exchange, Mt.Gox. According to Arkham, a crypto wallet linked to Mt.Gox Arkham has moved $1 billion worth of BTC. Such huge transfers often startled the market and caused short-term corrections.
Nonetheless, the market appears optimistic, as noted in our earlier post. According to Coinglass data, BTC’s open interest surged 10.07% to $57.37 billion. Bitcoin also led digital asset investment products with $724 million weekly inflows.
