Bitcoin Drops 3.88% Weekly, Analysts Warn of Further Decline to $92K

Bitcoin has experienced a significant decline, with its price falling from $110K to $103K over the past week, marking a 3.88% weekly loss. This downturn has raised concerns among analysts about the future trajectory of the cryptocurrency. One analyst, Axel Adler from CryptoQuant, has suggested that Bitcoin could potentially dip to $92K, citing an overheated market as the reason.

Adler's analysis is based on four consecutive sell signals generated by Bitcoin’s Net UTXO Supply Ratio. This ratio, combined with a visible drop in the UTXO Ratio, typically indicates an overheated market where profit-taking occurs and demand starts to lag behind supply. When a large share of coins move into unrealized profit, the incentive to hold (HODL) decreases, increasing the potential for profit-taking.

On-chain data supports Adler’s thesis. Bitcoin’s Net Unrealized Profit has plummeted to 0.553, its lowest in weeks. This drop suggests that most holders are currently holding fewer gains than before, signaling market weakness. Investors who bought BTC between $104K and $112K are now underwater, risking market capitulation as investors start panic selling, causing further downside. Adler posited that, at the current point, the market needs a serious reset.

This market reset could see BTC trade sideways between $95K and $105K until the Net UTXO Supply Ratio stabilizes around 0.85 – 0.9. Alternatively, a sharper pullback to $92K may play out first, easing the current overheated structure. In either case, Bitcoin is likely to drop below $100K until the market cools down again.

Adding to the selling pressure, the Taker Buy-Sell Ratio has remained negative for four straight days, signaling high selling activity in the market. If this selling pressure continues, BTC could drop to $101,488. If this support fails to hold, a dip below $100K is inevitable, with the next support around $98,890.

Despite the bearish indicators, some analysts remain optimistic about Bitcoin's prospects. They point to the cryptocurrency's technical and on-chain signals as potential indicators of future price increases. However, these signals must be considered in the context of the current market conditions, which include the recent sell signals and the overall market sentiment.

The recent sell signals and the accumulation of Bitcoin by large investors highlight the complex nature of the cryptocurrency market. While the sell signals suggest a potential downturn, the accumulation by whales and the falling exchange reserves indicate that there is still significant bullish sentiment in the market. Investors will need to carefully consider these factors as they navigate the current market conditions and make decisions about their Bitcoin holdings.