Learning from history, Bitcoin may soon face a significant correction
Bitcoin may face a significant correction. Glassnode analysts point out that although there is still room for its upward momentum, historical data shows that similar rising phases average a duration of 22 days before a correction occurs. Bitcoin recently reached a record high of $93,265.24, with a cumulative increase of over 110% this year. The current circulating supply has maintained high profits for about 12 days, and analysts expect the price to have upper and lower limits of $94,900 and $51,600, respectively, with selling pressure likely to occur near the upper limit
Analysts at the cryptocurrency data provider Glassnode stated that Bitcoin's upward momentum may still have room to run, but if history repeats itself, this cryptocurrency could face a significant correction in the coming days.
In a report on Tuesday, Glassnode analysts wrote that as Bitcoin continues to break historical highs, this largest global cryptocurrency has entered a new price discovery phase, with nearly all circulating Bitcoin supply in profit. In the early hours of Thursday, Bitcoin reached a record high of $93,265.24 per coin, up over 110% year-to-date.
The analysts noted that historically, such upward phases last an average of about 22 days before a significant correction occurs, during which approximately 5% of the circulating Bitcoin price may be pushed below the original acquisition price. They pointed out that currently, the circulating supply of Bitcoin has remained at high profit levels for about 12 consecutive days.
Meanwhile, the analysts indicated that before demand dries up and the momentum cools, the monthly profits from these Bitcoins have historically ranged between $30 billion and $50 billion. In contrast, since Bitcoin entered its latest record discovery phase, realized profits have been approximately $20.4 billion.
They wrote, “Although the profit-taking has been substantial, (profit levels) are still below historical peaks, indicating that there is still room for further increases before potential demand is exhausted.
Additionally, Glassnode analysts noted that the current cost basis for new or short-term investors is about $66,800, which sets the upper and lower limits for Bitcoin prices at approximately $94,900 and $51,600, respectively.
The analysts wrote that if Bitcoin approaches the upper limit of $94,900, it may highlight “a slowdown in demand, and the price has risen high enough for many existing holders to increase selling pressure.”