The sell pressure on Bitcoin was at its highest it had been in three years, a recent AMBCrypto showed. Aggressive taker sell activity drove the downtrend in recent weeks, after the 10/10 crash.
The spot ETF flows were persistently negative as well. It reflected the extremely weak sentiment in crypto, especially as risk appetite falls towards the end of the year, when volatility is expected to increase.
In the short term, there is an expectation of a Bitcoin [BTC] price drop toward $82k before a bounce to $95k. This is based on Friday’s mammoth Options expiry. The ETF flows and sell pressure underlined a lack of demand.
What should traders expect from the Bitcoin price action?
In a post on X, on-chain analyst Root demonstrated that Bitcoin was trading at around its on-chain fair value. This metric takes into account the realized capitalization, coin days destroyed, and liquid supply metrics.
According to the metric, Bitcoin was overvalued for the most part since March 2024. Toward the end of 2024, the price strayed into heavily overvalued territory.
The current drop to fair value territory is not automatically a buying opportunity. Analyst Axel Adler Jr explained that the short-term holder market reached a rare moment of pressure equilibrium.
The metric dropped into the bottom 5% of its distribution, which signaled equal buying and selling pressure among short-term holders.
This has only occurred in 5.8% of all 3-year observations, reflecting how the market is trying to gauge the next trend direction.
The liquidation heatmap highlighted the $83.5k and $94.7k as the nearby magnetic zones of notable size. The $90k-$92.7k was also a liquidity cluster to keep an eye on.
The 1-day chart showed that price action lacked a steady trend in December. At the time of writing, the internal structure was bearish.
A price dip to the $84k liquidity pocket is made more likely because of the bearish structure.
The Fibonacci retracement levels showed that a move beyond $101.7j and $107.5k was necessary to shift the investors’ bias bullishly.
Overall, the Bitcoin price action was likely to continue sideways over the next week, with short-term volatility due to the Options expiry.
Final Thoughts
- The Bitcoin price action remained bearish, although the short-term buyer-seller pressure was in equilibrium now.
- A bounce toward $94k-$97.2k would present a selling opportunity, due to the bearish swing move from $107k to $80.6k made in November.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
