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Bitcoin, the first and largest cryptocurrency by market cap, reached a record high of $124,533 on Thursday before retreating as the market fell, owing to profit taking and macroeconomic concerns.
In the last 24 hours, $342 million have been liquidated across various digital assets, as the crypto market extended its drop early Friday.
As the market trades lower, Bitcoin's key indicators are signaling caution, at least in the short term.
According to Glassnode, Deribit's Bitcoin DVOL indicator has reached near-historic lows, with only 2.6% of days marking lower levels. This paints a scenario of extreme complacency, in which low demand for downside protection may increase the risk of sudden volatility shocks.
Likewise, the implied volatility ratio for Bitcoin remains higher, with only 3.2% of days seeing higher values, indicating that traders might be pricing in uncertainty in the medium term.
Key levels to watch
Around press time, BTC was trading at $117,927 according to CoinGlass.
Utilizing Bitcoin's average entry price for new investors, as well as standard deviation bands, can help identify overheated zones. If this is taken into consideration, $127,000 marks the +1σ level and major resistance, with a breakout paving the way for a rise to $144,000 (+2σ), where prior market tops have often seen increased sell-side pressure.
On the other hand, the Short-Term Holder SOPR, a metric that tracks whether newer investors sold at a profit or loss, briefly dropped below neutral levels but quickly recovered and is currently around $112,000.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team