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Bitcoin (BTC) price has recovered more than 22% two weeks after Dip at $52,546, reaching approximately $64,121 on September 20th. Currently, the price has fallen to $62,761, with numerous technical and on-chain indicators warning about the strength of the recent price surge.
Daily chart of BTC/USD. Source: TradingView
Let's XEM at the factors that could push the price of Bitcoin down.
85% of Bitcoin investors are currently making a profit.
Bitcoin's recent surge above $62,000 has caused the price of BTC to surpass the strike price for short-term holder , as this group of traders converted some unrealized losses into profits.
A chart Chia by market analysis firm Into The Cryptoverse shows that only 14.2% of Bitcoin investors were still losing money when the price fluctuated around $62,600 on September 20th, while over 85% of the supply had made a profit.
Bitcoin: Profit/Loss Supply Ratio. Source: Into The Cryptoverse
The profitable and unprofitable supply ratio assesses whether the total number of Unspent Transaction Output (UTXOs) is profitable or not by comparing the price at which they were last moved and the current price.
If Bitcoin continues to rise from its current level, more investors will become profitable. A large number of profitable holder is often seen as a sign that the market is overheated, usually leading to or accompanied by a price correction.
Due to this on-chain signal, the price of Bitcoin may fall in the coming days as investors decide to take profits.
Open interest rates for Bitcoin futures surge.
In August, open interest in Bitcoin Futures Contract surged, peaking at $34.72 billion on August 27th. However, the price failed to break through the $65,000 resistance level and subsequently dropped 20% within 10 days.
Similarly, with the recent price surge exceeding $64,000, open interest has increased by 22.7% since September 8th to a four-week high of $34.72 billion on September 20th, according to data from Coinglass.
Given the current strong demand for BTC Futures Contract , investors are considering the possibility of a price drop similar to that seen at the end of August.
Interest rate on BTC Futures Contract on exchanges. Source: Coinglass
Some traders argue that the increase in interest rates on Bitcoin Futures Contract indicates excessive borrowing.
A large amount of open interest can increase price volatility, especially when traders hold many positions and decide to change their strategy abruptly.
It can also affect the overall psychology of traders when using open interest (OI) as a signal to decide whether to hold or sell Cryptoasset.
Bitcoin price hits resistance at $64,000.
Technically, Bitcoin's price is facing resistance at $64,000. When the price was rejected from this level on August 25th, it dropped 17.5% to $52,546, indicating that the bears are aggressively defending this area. Bitcoin bulls need to create a decisive daily candle closing above this level to sustain the recovery.
Daily chart of BTC/USD. Source: TradingView
Conversely, if $66,000 fails to become support, the price could fall further, with liquidation of long positions pushing the price back to $62,000.
Data from Coinglass shows a sell order wall built above $64,000, highlighting the importance of this resistance area.
Bitcoin liquidation heat map. Source: Coinglass
This article does not contain investment advice or recommendations. All investment and trading decisions involve risk, and readers should conduct their own research before making any decisions.
