Bitcoin Nears Market Top As This Metric Drops With 94% Of BTC Supply In Profit, Signaling A Sharp Correction

In a recent development that has caught the attention of the market, Bitcoin (BTC) appears to be at a potential turning point. A crucial on-chain indicator, Inter-exchange Flow Pulse (IFP), that tracks the flow of Bitcoin between various trading platforms, has just fallen below a critical point. This shift is seen as a correction mode for Bitcoin with the rising profitable BTC supply.

IFP’s Decline Signals A Market Top For BTC Price

Following the SEC’s approval of 11 Bitcoin Exchange Traded Fund (ETF) applications on Wednesday, January 10, Bitcoin’s price experienced a notable surge, increasing approximately 5% from $45,300 to a peak of $47,600. However, this initial spike was followed by a partial pullback, leading to a more stable trading pattern overnight.

Despite this volatility, Bitcoin’s value did manage to climb above the $49,000 threshold later on. This rise, though, was short-lived as the market witnessed an exit of short-term holders around this price level, leading to significant selling pressure. According to data from Coinglass, this resulted in a total market liquidation of around $82 million for Bitcoin, with a substantial $47 million of this being attributed to long position liquidations.

According to several market analysts, there’s a rising concern of a significant correction for the BTC price as holders are already in a high profit margin. According to a prominent crypto analyst, Crypto Rover, 94% of all Bitcoin supply is in profit. This figure is significant as it suggests that the majority of Bitcoin holders could sell their holdings for a profit, which may add selling pressure and contribute to a bearish market sentiment.

Additionally, another analyst, Ali Charts, states that the Inter-exchange Flow Pulse (IFP), that tracks the flow of Bitcoin between various trading platforms, has just fallen below its 90-day average. When this metric experiences an increase, it indicates that investors are currently moving a larger quantity of coins from spot to derivative exchanges, signaling a willingness to engage in riskier ventures. Conversely, lower values of this metric imply that there is currently minimal capital being channeled into derivative exchanges.

As a result, the current reverse in the IFP chart suggests that Bitcoin price might have reached its top and is now preparing for a correction.

In the midst of excitement over Bitcoin ETFs, there’s been speculation about a potential drop in Bitcoin’s price following ETF approvals. However, current viewpoint suggests that Bitcoin might actually rally by 10% above $50,000 before a minor pullback. However, there’s a 40% chance of a drop toward $42K before any upward surge.

What’s Next For BTC Price?

Bitcoin surpassed the key level of an ascending triangle pattern, signaling the beginning of a new uptrend phase. However, sellers strongly defended further surges and BTC price declined from $49K heavily. As of writing, Bitcoin trades at $45,906, declining over 2.9% from yesterday’s rate.

However, bulls are actively attempting to push the price above the critical resistance point of $48,500, aiming to catch aggressive sellers off guard. Should they succeed, the BTC price might face a significant buying demand, potentially surging toward the resistance zone of $50K-$52K.

However, bears will strongly defend a surge above the 20-day EMA on the 4-hour price chart. If the BTC price continues to remain below the EMA20 level, we might see the BTC price declining toward $44,200. In such a case, Bitcoin might test buyers’ patience at $42,000. However, this level might witness a strong buying demand, rebounding the price immediately.