Bitcoin (BTC), the world’s largest cryptocurrency, is facing a potential correction as it loses support at a critical level and trades at $27,300. Technical analysis shows that the Parabolic SAR has flipped bearish on the daily chart, indicating a possible downturn shortly. Bitcoin’s price has also dropped below the 50 exponential moving average (EMA), a critical support level. The Parabolic SAR is a popular technical indicator to identify potential trend reversals in the market. When the indicator flips bearish, it suggests that the asset’s price could be heading lower. In this case, the bearish signal on Bitcoin’s daily chart could mean the cryptocurrency is due for a correction. Related Reading: Pro-XRP Lawyer Weighs In On The Ongoing Lawsuit Ruling Brace For Bitcoin Correction As Support Levels Falter According to the trader and technical analyst Ali, If Bitcoin fails to sustain a close above the 50EMA level, it could confirm a potential correction to $26,200 or even $25,000. Furthermore, Bitcoin’s failure to hold the 50EMA as support is another warning sign for traders. The 50EMA is a widely watched moving average that shows the average price of an asset over the past 50 days. When an asset’s price falls below this level, it can be seen as a bearish signal, indicating that the asset may be headed lower. Currently, Bitcoin is down by over 4% in the last 24 hours, trading below the 50EMA; this could confirm a potential correction to $26,200 or even $25,000, according to the analyst. These levels represent significant support zones for Bitcoin; the cryptocurrency could see a further downside if they fail to hold. Furthermore, according to Ali, The Bitcoin network is showing signs of contraction, with declining user adoption and a series of lower highs and lower lows. This decreasing trend of wallet activity could signal a drop in Bitcoin’s price shortly. As BTC adoption declines, the demand for the cryptocurrency also decreases. This ultimately puts downward pressure on BTC’s price, as fewer people are interested in buying and holding the cryptocurrency. The trend of lower highs and lower lows seen in the Bitcoin network suggests that the cryptocurrency’s price may be headed for a correction. Added to this, more bad news for Bitcoin bulls mounts; Bitcoin’s largest whale address, owned by Binance, has been highly active in the market, moving $2.26 billion worth of Bitcoin in just four transactions, according to Santiment data. This sudden movement has caused Bitcoin’s supply on exchanges to drop from 6.78% to 5.84%, indicating that the whale may transfer Bitcoin to a cold storage or custody solution. BTC Above $25500, Signals Long-Term Bullish Trend Despite recent market fluctuations, BTC is still showing a strong upward trend, according to the analysis of the weekly BTCUSD chart by The Birb Nest, a cryptocurrency and investment platform. Furthermore, BTC is trading above the rising 200-week trend and the flattening 50-week trend, which is a positive indicator. The Birb Nest has pointed out that the upward trend will likely continue if Bitcoin remains above the $25,500 level. However, the crypto analysis firms keep a potential visit down to the $25,000 level. This level is seen as a key support level for Bitcoin, and a sustained hold above it could signal a bullish outlook for the cryptocurrency. Moreover, The Birb Nest has noted that there has been a weakened relationship between Bitcoin and the S&P 500 prices in recent weeks. This is reflected in the 7-week correlation coefficient, which stands at 0.39. Although the correlation between Bitcoin and the S&P 500 has weakened, it remains positive. This suggests that both assets still share some similarities in terms of price movements. Therefore, if there are gains or losses in large-cap stocks, Bitcoin will likely be somewhat affected. Related Reading: Discovering The Next PEPE And SHIB: Whales To Keep Track Of Featured image from Unsplash, chart from TradingView.com
