3 On-Chain Factors Pointing to Deeper Bitcoin Correction, Analyst Warns

Bitcoin (BTC) momentarily fell below the $90,000 mark yesterday for the first time in seven months, a 29% collapse from its October high. Now, some market observers are saying this drop is not a simple correction, with on-chain data showing a troubling build-up of selling pressure on major exchanges, suggesting the market has not yet found a true bottom. Mounting Evidence of Sell-Side Pressure A detailed analysis from CryptoQuant indicates that three key on-chain metrics are in a critical state. First, the Average Bitcoin Deposit Volume on Binance has climbed past a critical threshold of 0.9. Historically, spikes in this metric have come before negative price reactions, as it signals a growing intent among investors to sell their holdings. Second, the total Bitcoin reserves held on Binance have ballooned to over 580,000 BTC. Analyst CoinDream stated that a large accumulation of coins on an exchange often means there’s potential sell pressure waiting to be unleashed. This trend usually acts as a persistent bearish weight on the market unless it encounters equally strong buyer demand. The expert noted that recent increases in these reserves have consistently correlated with periods of price weakness. Finally, data for the network-wide Net Exchange Flows showed that more than 5,000 BTC hit exchanges yesterday, marking the biggest sell pressure since the flagship cryptocurrency initially broke below the $110,000 level. CoinDream concluded that selling pressure is accelerating while buyer demand is conspicuously absent. According to them, a genuine market bottom is typically characterized by strong demand inflows, which current indicators are still not showing. “Current on-chain data, such as market buy volume and other demand indicators, do not yet signal a bottom,” they wrote. “Caution is advised, as further downside remains likely.” A Broader Market Backdrop of Fear The bearish on-chain outlook has come within a brutal market-wide correction. BTC was trading around $90,700 at the time of writing, down 5.4% in the last 24 hours and almost 14% in the past week. This drop is part of a wider wipeout of more than $1.1 trillion, described by some as a “structural reset” for the industry. The negative momentum is being felt across technical indicators, with Bitcoin decisively breaking below its weekly 50-period Exponential Moving Average (EMA), a key support level that held throughout the bull market, adding credence to the bearish structure. Furthermore, experts like CryptoQuant CEO Ki Young Ju added that institutional demand has cooled, with the Coinbase Premium at a nine-month low and spot ETFs experiencing sustained outflows. Despite the grim picture, some see a potential for a short-term reprieve. A separate market update from NovAnalytica suggested that aggressive taker sell volume may be exhausted, potentially creating an entry zone for large buyers. The post 3 On-Chain Factors Pointing to Deeper Bitcoin Correction, Analyst Warns appeared first on CryptoPotato.