Despite a promising kickoff to the month, Bitcoin’s ascent to the coveted $50,000 mark is hitting significant resistance, firmly entrenched below $44,200.
Notably, this observed weakness coincides with reports of MT Gox creditors beginning to receive compensation, triggering concerns of a potential market dump. However, earlier on Thursday, Checkmate, the lead on-chain analyst for Glassnode, provided insights into the situation, attributing the current weakness to selective profit-taking by investors.
Despite this, Checkmate maintained optimism about Bitcoin’s outlook, stating, “Profits are being taken for Bitcoin, however, nowhere near the extremes we see near local and global market peaks. Profit-taking revalues coins from lower to higher cost basis and also indicates new capital is flowing in to absorb them. So far, so good.”
Adding another layer to the complexity, insights from “joaowedson” an analyst for the onchain analytics platform Cryptoquant, highlighted the significance of the Puell Multiple indicator. This indicator, which measures the ratio of the daily value of Bitcoin issued in US dollars to the 365-day moving average of the daily value, has historically played a crucial role in predicting market reversals.
The pundit noted that Puell Multiple has reached levels that have historically acted as significant resistance points in 2012, 2016, and 2019. Notably, these instances were followed by substantial corrections in Bitcoin prices.
“This consistency over time suggests that the Puell Multiple can serve as a valuable indicator for investors, alerting to potential market reversals when it reaches these specific resistance levels,” he wrote.
Bitcoin stands at a crossroads in the current landscape, with two potential scenarios unfolding. In a bullish outlook, there is a strong likelihood that Bitcoin will maintain its upward trajectory, breaking through the $44,200 resistance as the spot Bitcoin ETF decision looms. In the event of such a development, the targeted price is set at $50,000. Notably, the anticipation of significant news could spark a substantial upward spike, potentially followed by a “sell the news” event, before the upward trend resumes. This scenario is deemed the most probable.
On the other hand, a dip below $40,000 carries the risk of liquidating leveraged long positions and initiating a retracement toward $38,000. Factors supporting this bearish scenario include the necessity for a correction following a year-long rally, year-end sales, and a decrease in trading activity during the holiday season.
Bitcoin was trading at $42,411 at press time after a 1% drop over the past 24 hours.