Bitcoin’s decreasing buyer momentum and high supply in profit could be an early sign that the top is in.
Bitcoin’s recovery could be curtailed by stubborn resistance from the $106,000-$108,000 supply zone.
Persistent profit-taking could see BTC price drop toward the $100,000 level.
Bitcoin (BTC) price has rebounded by 3% to $106,000 from its weekend lows. However, its failure to decisively break above $106,000 has sparked concerns about whether BTC price could see a deeper correction over the next few days.
Bitcoin could drop on waning buyer momentum
Bitcoin investor behavior data shows a drop in buying momentum,
indicating a local top could be in, according to data from market intelligence firm Glassnode.
The chart below shows a drop in Momentum Buyers (investors who buy during uptrends), with the RSI dropping to 20. On the other hand, there is a sharp rise in Profit Takers (investors locking in gains) with the RSI rising to 77.
Glassnode said:
“This trend often shows near local tops, as traders begin locking in gains instead of building exposure.”
Meanwhile, Bitcoin’s supply in profit remains high at 96%, with the price around $105,000 on June 3.
A high number of holders in profit is often seen as a sign of an overheated market, which typically precedes or coincides with price corrections.
As a result of these onchain signals, Bitcoin’s price may see pullbacks over the coming days as investors choose to book profits.
Bitcoin price faces stiff resistance on the upside
From a technical perspective, Bitcoin’s latest recovery was curtailed by a supply congestion zone between $106,000 and the previous $109,000 all-time high.
When the price was rejected from this level on Jan. 31, BTC dropped 27% to $78,000, suggesting that the bears are aggressively defending this zone.
Bitcoin bulls were required to produce a decisive daily candlestick close above this area to sustain the recovery.
Failure to flip $106,000 into support could lead to a deeper correction in Bitcoin price, with the accompanying long position liquidations pulling the price toward the $100,000 psychological level.
Data from CoinGlass showed a wall of ask orders building up above $106,000 in the 24-hour timeframe, reinforcing the importance of this resistance area.