Bitcoin, Ethereum at Risk of Painful Correction After Losing Crucial Support

Key Takeaways

  • Bitcoin flashes several bearish signals, indicating that its uptrend has reached exhaustion.
  • Ethereum whales are starting to pull their money out of the market, but prices hold above stable support.
  • It will take an enormous amount of buying pressure to invalidate BTC and ETH’s bearish outlook based on transaction history.

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Bitcoin appears to have entered a new corrective period that will likely bring Ethereum down with it.

Bitcoin’s Uptrend Primed to Reverse

The MRI indicator supports the thesis that Bitcoin is bound for a steep correction.

The technical index presented sell signals in the form of red one candlesticks on BTC’s 1-month, 1-week, and 3-day charts. Although some of these bearish formations have developed a few trading sessions back, the near-term future still does not look good for the bulls.

A further increase in sell orders around the current price levels could see Bitcoin enter a one- to a four-month-long corrective period before the uptrend resumes.

BTC/USD on TradingView

The Entity-Adjusted Spent Output Profit Ratio (a-SOPR) indicator adds credence to the bearish outlook. This fundamental metric, which represents the profit ratio of BTC tokens moved on-chain, recently reached its highest value ever recorded.

As the a-SOPR surpassed the 1.24 mark while Bitcoin made a new all-time high of $42,000, these prices were too attractive for investors to wait any longer before taking profits.

If this on-chain gauge proves to be as accurate as it was in the past when it anticipated the market top of April 2013, December 2013, and December 2017, Bitcoin could be bound for a devastating retracement.

Bitcoin Entity-Adjusted Spent Output Profit Ratio by Glassnode

Some whales (high net worth traders) have already started booking profits. Indeed, the number of addresses holding more than 1,000 BTC dropped by more than 0.3% since Jan. 24. Roughly seven whales have left the network over this short period, adding…

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