How deep will this correction be when BTC falls to $4000?

The price of Bitcoin came within a small step of reaching the $100,000 milestone.

The market has rebounded aggressively after the US election, as buying Bitcoin has been one of Trump’s most profitable trades. However, the cryptocurrency has pulled back and is now further away from its six-digit target.

Technical Analysis

By Edris Derakhshi (TradingRage)

The daily chart

On the daily chart, the price has risen almost vertically since the beginning of November, and it is likely that 100K BTC could be seen soon. There is no meaningful observation that can be made based on price action alone. However, the RSI has been showing a massive overbought signal for some time now.

This could indicate that while Bitcoin is likely to reach $100,000 in the near term, there is also a considerable possibility of further correction or consolidation.

The 4 hour chart

Looking at the 4-hour chart, things seem to be lining up for a possible correction scenario as the price has been gradually rising within an ascending channel for the past two weeks. Coupled with a clear bearish divergence shown by the RSI, a correction seems likely.

However, any potential pullback is likely to occur after the market has broken above the $100,000 level.

Chain analysis

By Edris Derakhshi (TradingRage)

Exchange reserve

Although the price of Bitcoin is continuously rising, market participants are extremely optimistic that BTC will eventually rise above $100,000. These expectations are clearly visible in the exchange reserves chart.

The Bitcoin exchange reserve metric measures the amount of BTC held in wallets associated with trading platforms. These BTC are generally an intermediary of the supply as they can be sold at any time.

As the chart suggests, the exchange reserve metric has been picking up as investors are withdrawing their Bitcoin from exchanges. This clearly indicates that market sentiment is bullish, and the statement is supported by a significant supply shock, which could push the price higher in the coming weeks.

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