Will Bitcoin Price Experience Another Crash?

Bitcoin’s struggle to maintain a price above $64,000 may indicate the onset of a potential price reversal.

Bitcoin’s (BTC) price saw a significant recovery, climbing over 22% after reaching a low of $52,546, eventually hitting around $64,121 on September 20. However, the price has since retreated to approximately $62,761, raising concerns among analysts as various technical and on-chain indicators signal potential weakness in the rally.

Key Factors Potentially Leading to a Price Drop

Majority of Bitcoin Holders Are in Profit

The recent surge above $62,000 allowed more than 85% of Bitcoin holders to shift from unrealized losses to profits. According to a recent analysis from Into The Cryptoverse, only 14.2% of investors were in the red when Bitcoin hovered around $62,600.

The assessment of profit and loss among holders evaluates how many unspent transaction outputs (UTXOs) are profitable by comparing their movement price to the current market price. A significant number of holders being in profit can often signal an overheated market, which usually precedes corrections. If Bitcoin continues its upward trajectory, it could prompt many investors to take profits, leading to price pullbacks in the near future.

Increased Bitcoin Futures Open Interest

In August, Bitcoin futures saw a sharp rise in open interest, peaking at $34.72 billion on August 27. Following this spike, the price failed to overcome the $65,000 resistance, which resulted in a 20% decline within ten days.

A similar pattern is emerging after the recent price rise above $64,000, with open interest surging by 22.7% since September 8, reaching a four-week high. This trend indicates a potential for a similar pullback as witnessed at the end of August, as investors weigh their options.

Traders suggest that the increase in Bitcoin futures open interest may represent excessive borrowing, which could lead to more volatile price movements, especially if abrupt changes in trading strategies occur.

Resistance Level at $64,000

From a technical analysis standpoint, Bitcoin is currently facing resistance at the $64,000 mark. The previous rejection at this level on August 25 led to a significant decline of 17.5% down to $52,546, indicating strong selling pressure at this zone. A decisive daily close above $64,000 is necessary for bulls to maintain the upward momentum.

If Bitcoin fails to establish $66,000 as support, it may lead to further declines, potentially pulling the price towards $62,000. Additional data shows a buildup of sell orders just above $64,000, emphasizing the significance of this resistance area.

This analysis does not provide investment advice. All trading moves come with risks, and individuals should perform their own due diligence before making investment decisions.