- Bitcoin was moving towards the ‘Accessing Tops’ indicator at the time of writing
- Once the coin touches or goes above this indicator, a decline can be expected
The approval of a spot-based Bitcoin ETF by the US Securities and Exchange Commission (SEC) will likely result in a downward correction in the price. Bitcoins [BTC] price, CryptoQuant analyst Binh Dang found in a new report.
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Dang combined BTC’s Cumulative Value-Days Destroyed metric and the 50-day moving average of the market price to create an indicator called ‘Accessing Tops’. For the uninitiated, CVDD measures the activity and movement of the coin over time to identify market bottoms.
Dang noted that this indicator is used to identify potential market corrections. When the market price of the coin touches or exceeds this indicator, it is a sign that the market may be due for a pullback.
Over the past month, BTC has witnessed a significant price increase. Exchanging hands for $34,296 at the time of writing, the coin has risen 27% in value over the last thirty days, according to data from CoinMarketCap.
Source: CryptoQuant
Notably, BTC has started to approach the ‘Accessing Tops’ indicator in recent weeks.
According to Dang, the overall market is currently bullish due to the possible adoption of Bitcoin’s spot-based ETFs. This has caused investors to intensify their accumulation in anticipation of selling above their cost basis.
Dang believed that such an endorsement could cause the price of BTC to rise above the “Accessing Tops” indicator, after which it would correct and move downward.
He claimed:
“At least for now, with the momentum of belief that there will soon be approved spot ETFs, and if there is no bad news and only good news, the best possible spike may occur when short-term investors decide to hold stocks. positions and keep pushing BTC up to reach the indicator threshold.”
The decline could happen sooner than expected
A review of BTC’s price movements on a daily chart showed that the coin’s price might experience a correction before the spot ETF application was approved by the SEC.
Readings from the Bollinger Bands indicator showed that BTC’s value remained severely volatile at the time of writing.
In fact, the price of the coin was trading close to the upper band of the indicator, indicating that the market was overbought and that a pullback was imminent.
When the gap between the upper and lower bands of the Bollinger Bands is large, it indicates that the price of the asset in question deviates from the average.
Read Bitcoins [BTC] Price prediction 2023-2024
Likewise, the coin’s Relative Strength Index (RSI) and Money Flow Index (MFI) confirmed the overbought nature of the BTC market. At the time of writing, the coin’s RSI was 80.13, while its MFI was 83.89.
Buyer exhaustion and profit taking are common at these levels; caution is therefore advised.
Source: BTC/USDT on TradingView