Key Takeaways
Even though Bitcoin has not strayed far from its all-time high, social media engagement has turned bearish. One metric showed that calls for a deeper BTC correction could prove correct.
Bitcoin [BTC] was trading just a few dollars under $118K, at press time, after a 4.24% price dip from the all-time high of $123,091. This was a relatively minor price dip.
During bull runs, Bitcoin has seen much deeper corrections in previous cycles.
Source: Glassnode
The bull run in 2021 saw a 50% drawdown in July 2021 before climbing to $69K later that year. Hence, traders and investors can not reasonably balk at a 5% pullback.
There were signs that a deeper dip could come. How seriously should we take these signs?
Exploring the bullish and bearish case for Bitcoin in the coming days
Source: CryptoQuant
In a post on CryptoQuant Insights, user Chairman Lee observed that Bitcoin was struggling to overcome the $118K resistance zone. At the same time, the exchange whale ratio was at 0.52.
The metric measures the share of the top 10 inflows versus the total BTC inflows to exchanges.
The metric was at 0.52, and its 30-day Moving Average has been rising since May. Historically, readings of 0.5 generally suggest short-term corrections are likely.
In an earlier report, AMBCrypto highlighted that the recent losses were exacerbated by the long liquidations, driving prices to $115K before it rebounded higher.
Despite the rebound, the market structure remained bearish. The demand zone at $111k-$112k was still an attractive magnetic zone for the price to gravitate toward.
The user concluded that the $118k level was a key battleground in the short term. A sustained price move beyond $118K, while the exchange whale ratio falls, could push Bitcoin to $122K-$124K.
On the other hand, if the metric stays above 0.5 and the price is unable to reclaim $118k, a deeper price drop would be more likely.
Source: CoinGlass
The liquidation heatmap agreed with these findings. The two noteworthy liquidity clusters nearby were $113.2K and $121.8K. At the time of writing, a move higher appeared likely since it was closer to the market price.
The exchange whale ratio was something to keep an eye on. If the metric climbs higher (beyond 0.6) over the weekend, traders need to remain vigilant of a deeper pullback.
For investors with a longer time horizon, the future still looks promising.
