Bitcoin Price Analysis: BTC in Danger of Prolonged Correction After Rejection

Bitcoin recently hit $111,000 but faced rejection, leading to a potential correction. Technical indicators suggest a pause in momentum with buyers still in control above $91,000. The 4-hour chart shows a breakdown below the ascending channel, indicating bearish sentiment. On-chain metrics reveal renewed investor confidence, though caution is advised as the market appears to be at a sensitive juncture.

Bitcoin’s recent surge up to the $111,000 mark appears to have met a brick wall, sparking concerns about a looming correction. After tapping into significant buy-side liquidity above the highs seen in January and February, the cryptocurrency has since shifted into a state of pullback or possible consolidation. Traders are now keep a watchful eye on critical price levels for what could be the next major move in the market.

From a technical analysis standpoint, Bitcoin faced a sharp rejection at the $111,000 supply area. This sparked a swift fall, signalling a potential downward trend. The price action hints at a continuation lower, while the daily Relative Strength Index (RSI) has dipped to around neutral territory, suggesting a halt in momentum. Notably, the 100 and 200-day moving averages indicate a bullish stance below current prices, sitting within the range of $90,000 to $95,000. There’s also a fair value gap between $101,000 and $98,000, which might attract prices in the short term yet could serve as a demand zone for recovery post-penetration.

Despite the setback from $111,000, the broader outlook remains positive as prices stay above an ascending trendline and crucial moving averages. Provided Bitcoin continues above the $91,000 demand zone, control still leans towards buyers. Should the fair value gap be filled with a strong market reaction, a new higher low might emerge, paving the way for another push toward the $111,000 to $114,000 resistance area.

Taking a look at the 4-hour chart, Bitcoin has broken beneath the ascending channel established since early April. The breach was followed by resistance at the $108,000 zone, indicating that this previous support level may now be acting against the price. The RSI on this shorter timeframe has dipped slightly below 50, which points to increasing bearish momentum.

At the moment, prices are churning in a defined range between $102,000 and $108,000 post-sell-off. For those trading in the shorter term, eyes should be on the mid-range and the swing lows close to $102,000. If Bitcoin dips below this mark, it could trigger a sharper decline towards the key support level at $100,000. Conversely, if it reclaims the $108,000 mark, this might invalidate the current bearish outlook and set the stage for a retest of the upper range and possibly revisit $111,000. But for now, indicators lean towards the likelihood of a deeper correction ahead.

On the on-chain front, the 30-day exponential moving average of the Adjusted SOPR (aSOPR) is showing favourable signs, remaining above the 1.0 level. This generally indicates that more coins being traded on the chain are turning a profit, indicating a boost in investor confidence. It seems holders are more inclined to cash in on profits rather than sell off holdings at a loss.

Historically, consistent values of aSOPR above 1.0 during bull markets aid in supporting bullish continuation, especially when price corrections have been mild. Nonetheless, the market could be entering sensitive territory. A sharp rise in aSOPR often signals a local peak as short-term holders rush to take their profits. A healthy market trend would ideally involve a slight reset of aSOPR above the threshold and a price pullback that aligns with support zones before heading towards another uptrend.