4 Signals of Bitcoin Price Correction You Should Watch Out For

Bittime - In recent days, Bitcoin prices have risen significantly, even reaching a new ATH at $92,000 on November 13. 

However, even though it appears to be in a strong bullish trend, several signals suggest a Bitcoin price correction could happen in the near future. Here are 4 important indicators to pay attention to.

1. Bitcoin Price Correction: Relative Strength Index (RSI)

One technical indicator that needs to be paid attention to is Bitcoin's Relative Strength Index (RSI). RSI is an indicator tool that measures the speed and changes in price movements, on a scale from 0 to 100. 

When the RSI value is above 70, the asset is usually considered overbought, which means it could soon experience a price correction. On the other hand, if the RSI value is below 30, this is usually considered a buying opportunity.

When this article was written, Bitcoin's RSI was around 77, which indicates that BTC is in an overbought condition and has the potential to experience a Bitcoin price correction. 

Read Also: What is Bitcoin Dominance and Why is it Important for the Crypto Market?

2. Bitcoin Price Correction: Market Value to Realized Value (MVRV)

Apart from RSI, there is the Market Value to Realized Value (MVRV) ratio, which helps to determine whether an asset is overbought or oversold by comparing the current market value with its realized value. 

Currently, Bitcoin's MVRV is around 2.6. A ratio between 2.6 to 5 usually aligns with market tops. A high MVRV ratio is often a sign that prices may fall soon.

With the MVRV ratio currently at this limit, it is possible that Bitcoin is approaching its peak and has the potential to experience a Bitcoin price correction.

3. Bitcoin Price Correction: Network Value to Metcalfe (NVM)   

The next indicator is Network Value to Metcalfe (NVM). This ratio compares Bitcoin market cap with network activity, in particular the number of active addresses. 

Using the principle of Metcalfe's Law, the NVM indicator provides clues about whether the asset is overvalued or undervalued.

At the moment, Bitcoin's NVM ratio currently stands at around 1.24. This figure indicates a bearish trend, meaning Bitcoin's price may be too high compared to activity on the network. 

If this trend continues, a Bitcoin price correction could occur as an adjustment to the imbalance between market value and network usage.

4. Bitcoin Price Correction: Profit Condition of Majority of Investors

The final indicator is the profit condition of Bitcoin investors. 99% of Bitcoin investors are currently in a profit position. 

This means that most Bitcoin holders have profits in their portfolio, while 0% are in a losing position and only 1% are at break-even. 

Even though it sounds positive, conditions where the majority of investors make a profit could actually be a sign of a potential short-term Bitcoin price correction.

Last October, around 95% of the total Bitcoin supply was in profit when the price broke through $69,000. Soon after, a major correction occurred, which saw the price of Bitcoin drop below $65,500. 

A similar situation occurred in September and March, when prices fell after the majority of investors were in profit positions. With many investors currently profitable, selling pressure could increase, which could trigger a Bitcoin price correction.

Read Also: Latest Facts About Bitcoin Overheating and Its Impact for Investors

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