Bitcoin could face potential correction amid concerning on-chain signals

Analysis from CryptoQuant indicates that Bitcoin (BTC) traders should exercise caution due to the appearance of a major negative signal. The firm notes that Bitcoin’s Realized Cap crossing Thermo Cap is a key warning sign that has previously triggered major market dips.

Crypto market analyst Bilal Huseynov pointed out that a bearish crossover known as a “Dead Cross” has developed in the market recently. The Dead Cross takes place when the Thermo Cap indicator drops below Bitcoin Realized Cap. Realized Cap calculates Bitcoin market value through the last transaction prices, which accurately represents network financial worth.

Market participants remain watchful about this pattern because of its demonstrated capability to forecast market adjustments. Bitcoin’s large price drop in 2022 began after a previous crossover event led prices to decrease from $45,000 to $16,000. Experts and traders worry about market value drops because this signal has resurfaced.

Huseynov, referencing fellow analyst Avocado_onchain, indicated that Bitcoin might retest support around the $75,000 level if historical patterns repeat. Such a retracement could serve as a brief cooling-off period before further bullish momentum can occur.

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Institutional Interest Remains Strong Despite Warning Signals

Institutional investors remain confident in Bitcoin’s long-term value despite these bearish signals. Recently, investment firm Metaplanet reinforced its bullish stance, acquiring an additional 160 BTC valued at over $13 million. This latest purchase increased Metaplanet’s total Bitcoin holdings to 4,206 BTC, highlighting sustained institutional interest.

The ongoing purchase activities from institutions serve market analysts as evidence of strong market fundamentals. Recent events have made market participants actively watch out for short-term disturbances in the market. Monitoring systems must consistently evaluate the relationship between Realized Cap and Thermo Cap for future market performance assessment.

Market participants align their short-term caution about historical data against positive sentiments from institutional investors’ activities. The fundamental reliability of Bitcoin functions to reduce potential price drops even with existing warning indications.

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