• Over 99% of Bitcoin supply is in profit, hinting at potential profit-taking and selling pressure
• Bitcoin’s Relative Strength Index (RSI) is displaying overbought conditions across multiple timeframes
• Bitcoin price hit resistance just below the $73,800 all-time high, failing to produce a decisive daily candlestick close above this level
The price of Bitcoin (BTC) has seen a significant rally in recent days, rising over 10% between October 26th and October 29th to reach $73,600, just 0.2% below its all-time high of $73,808. However, several technical and on-chain indicators are now raising concerns that this rally may be losing momentum and a price reversal could be on the horizon.
Over 99% of BTC Supply is in Profit, Hinting at Overheating
Bitcoin’s push towards its all-time highs has resulted in almost all holders returning to profit. Data from CryptoQuant shows that less than 1% of Bitcoin investors were still at a loss when the price reached $72,323 on October 31st. This means 99% of the supply is now in profit.
According to analytics firm IntoTheCryptoverse, a moving average (MA) line approaching 100% often signals overheated conditions. Historically, the 50-day SMA reaching 97% or above has been a decent indicator of an impending short-term pullback. Currently, the 50-day SMA is at 86.3% and rising, suggesting the market could be becoming overbought.
Bitcoin’s RSI is Flashing Overbought on Multiple Timeframes
The RSI heatmap from CoinGlass shows Bitcoin’s RSI is displaying overbought conditions on the daily, 12-hour and 4-hour timeframes. Overbought conditions generally reflect that recent price increases may be overextended and due for a reversal.
The Crypto Fear & Greed Index from Alternative.me, which tracks market emotions and sentiments, is also showing ‘Extreme Greed’ at a value of 77. Alternative notes that historically, when investors become too greedy, the market is often due for a correction.
Bitcoin Faces Technical Resistance Above $73K
From a technical perspective, Bitcoin faced resistance just below its all-time high of $73,500. Previous failures to break above all-time highs this year have resulted in significant price drawdowns.
Unless Bitcoin bulls can produce a decisive daily close above $73,500 and flip it to support, failure to break out could cause a drop towards $71,500 or lower as long positions are liquidated. Data from CoinGlass shows a wall of sell orders has built up near $73,000, highlighting the importance of this resistance zone.
In summary, while the rally remains strong, overbought metrics and overhead resistance warrant caution in managing risks. However, these conditions do not guarantee a price reversal, especially given the positive fundamentals for Bitcoin going into November.
