The crypto market was buzzing with excitement just days ago as Bitcoin (BTC) surged to a new record high, briefly touching the $124,000 mark. However, the celebration was short-lived. The peak was immediately followed by two consecutive bearish daily candles, pulling the price back down to a critical decision point. As the dust settles, investors are now scouring the charts and on-chain data for clues about Bitcoin’s next major move.
The Daily Chart Perspective: A Test of the Trend
On the daily chart, the broader uptrend is facing a significant test. Bitcoin’s price is currently re-engaging with the lower boundary of a long-term ascending channel that has guided its rally for months. This level has historically provided strong support, but its durability is now in question.
Bearish Scenario: A decisive breakdown below this channel would be a significant technical development. If this occurs, the $110,000 region is the next major line of defense, reinforced by the nearby 100-day moving average, a key indicator of medium-term trend.
Bullish Scenario: Conversely, if the channel’s support holds firm and buyers step in, it would signal continued strength. A successful bounce from this level could refuel the bullish momentum, potentially paving the way for another attempt at the highs and targeting the $130,000 level and beyond.
The 4-Hour Chart: Short-Term Structure Weakens
Zooming into the 4-hour timeframe provides a more granular view of the recent price rejection. The attempt to break and hold above the $123,000 resistance level failed swiftly, triggering a sharp decline. This drop also crucially broke through a short-term trendline that had been supporting the price over the past few weeks, signaling a shift in the market’s immediate structure.
Currently, the 111,000 region becomes increasingly probable.
The Relative Strength Index (RSI) is showing a slight recovery after dipping below the 50 mark, suggesting that a retest of the $116,000 support may occur before the next directional move is confirmed. Whether this level holds or breaks will likely set the tone for Bitcoin’s short-term trend.
On-Chain Analysis: A Disturbing Divergence
Beyond the price charts, on-chain data reveals what could be an early warning sign of trend exhaustion. This analysis focuses on the Short-Term Holder Spent Output Profit Ratio (STH-SOPR), which indicates whether short-term investors are selling at a profit (SOPR above 1) or at a loss (SOPR below 1).
During healthy rallies, like the one in early 2023, the STH-SOPR consistently remains above 1 as investors take profits into strength. Currently, with Bitcoin trading around $118,000, the SOPR is indeed above 1, confirming that recent sellers are in profit.
However, a critical divergence has emerged. As Bitcoin’s price forged new highs throughout 2024, the corresponding peaks in the STH-SOPR have been getting lower. This bearish divergence suggests that the profit margins for short-term holders are shrinking with each new price high. When the incentive to sell for a large profit diminishes, it can signal weakening demand and an exhausted rally. This trend is often an early indicator that the market could soon be facing trouble, as it points to fading conviction among recent buyers.
In conclusion, while Bitcoin remains in a long-term uptrend, the recent rejection from its all-time high has introduced significant uncertainty. The price is now at a crossroads, testing crucial support on both daily and 4-hour charts. The most compelling piece of the puzzle, however, may be the on-chain divergence, which cautions that the recent rally’s strength is waning. The market’s reaction in the coming days will be critical in determining whether this is a temporary pullback or the start of a more substantial correction.
