Will the Bitcoin price crash hard?

Over the past three days, Bitcoin has fallen more than 3.7% after hitting a 12-week high of $69,487 on October 21. Several signals now point to a deeper correction, making a quick recovery seem increasingly unlikely.

92% of Bitcoin Holders in Profit

Bitcoin’s recent surge above its 2021 record high saw the majority of holders return to profits, fueling fears that profit-taking could push the price further down.

Data from CryptoQuant shows that only 7.6% of Bitcoin investors suffered a loss when the price was around $67,381 on October 23. This means that no less than 92.4% of the total supply was in profit.

According to independent analyst Axel Adler Jr. most Bitcoins were purchased around the $55,000 level. As long as Bitcoin remains above this limit, more than 90% of investors will remain in profit. This high percentage of gains is often seen as a signal of an overheated market, which could lead to a downward correction.

Bitcoin’s open interest remains high

Open interest (OI) on Bitcoin derivatives reached a new high on October 21 as BTC tried to break the resistance around $70,000. According to CoinGlass, Bitcoin futures open interest topped $40 billion for the first time, indicating an increasing number of open futures contracts. This increases the chance of volatility in the market.

Additionally, Bitcoin CME futures open interest reached an all-time high of 179,550 BTC, equivalent to approximately $12.1 billion. CME led with 28.2% of total OI, followed by Binance and Bybit.

Continued demand for BTC futures is raising concerns about a possible price drop similar to August, when Bitcoin lost nearly 20% of its value within 48 hours.

Bitcoin drops back from overbought position

Data from Cointelegraph Markets Pro and TradingView shows that Bitcoin peaked above $69,000, while the daily RSI reached an overbought condition (above 70) on October 20. This led to a sharp pullback towards $66,000.

Additionally, the Crypto Fear & Greed Index is at a high level of 72, indicating “greed” conditions, indicating an increased risk of a price decline in the crypto market. The last time this index was this high was in March, just before Bitcoin fell from $73,835 to $56,500.

Similar situations were also seen during the peak of the bull market in 2021 and in 2019, which were also followed by sharp price declines.