The Bitcoin price has dropped sharply this month. Since early November, it has fallen almost 15%, turning one of the strongest assets of the year into one of the weakest in the current pullback.
### Bitcoin Momentum Softens the Fall, but One Level Must Validate It
As Bitcoin’s price retraces, there are early signs that selling pressure might be weakening. This observation is primarily derived from the Relative Strength Index (RSI), which slipped into the oversold zone before reversing direction this week. Such a rebound in the RSI typically indicates that sellers are losing their grip on the market.
Looking at the larger picture, Bitcoin has demonstrated resilience. Between April 30 and November 14, the price formed a higher low, suggesting the overall bullish trend remains intact. However, concurrently, the RSI chart showed a lower low, indicating a hidden bullish divergence. This phenomenon often signals that a strong trend could be attempting to resume following a significant correction.
For these indicators to hold significance, Bitcoin’s price must reclaim the crucial level of $100,300. This level has served as a support zone since late April but may now act as psychological resistance. If Bitcoin can rise above this price point, the potential for a rebound becomes more apparent.
### Supply Data Indicates Key Resistance Zone
Further analysis of supply data reinforces the importance of this $100,300 level. The UTXO Realized Price Distribution highlights a significant cluster of long-term Bitcoins created around the $100,900 range. Such clusters often represent critical decision points in the market due to the concentration of supply at a specific cost basis.
When a significant number of coins are clustered around a price point, it can lead to heightened resistance if the price approaches that zone again. As previously discussed, the momentum only becomes meaningful if Bitcoin closes above that resistance level. Without a successful breach, the oversold signals and bullish divergence remain unconfirmed, leaving uncertainty in the market.
### A One-Year Low in NUPL Keeps the Bottoming Case Alive
Another noteworthy indicator for Bitcoin’s potential rebound stems from the Net Unrealized Profit/Loss (NUPL) metric. Currently, the NUPL has dipped to 0.40, its lowest level in a year, signaling that the market is holding only minimal unrealized profits. This scenario is reminiscent of previous early-cycle periods.
Historically, similar low readings in the NUPL have preceded significant price increases. For instance, when NUPL last approached these lows in April, Bitcoin enjoyed a remarkable climb of approximately 46% over the following two months. While this historical pattern cannot guarantee a repeat occurrence, it does suggest that the market has entered a pressure zone where rebounds are frequently formed—provided prices stabilize.
Yet, similar to earlier points, this metric’s reliability hinges on Bitcoin breaching that same resistance band. Without reclaiming this level, the thesis of a Bitcoin bottom remains open but inactive, leading traders to remain cautious.
### Bitcoin Price Trades in a Falling Channel — Critical Levels in Sight
Currently, Bitcoin is navigating a falling channel, indicative of a bearish short-term trend. The first critical step for Bitcoin to alter its trajectory is straightforward: it must regain the $100,300 mark. A daily close above $101,600 would solidify a positive flip, transforming former support back into a new support level.
If Bitcoin manages to break this level, the subsequent significant resistance will materialize around $106,300. A successful breach of this threshold would effectively thrust Bitcoin out of its current falling channel. This shift could transition the trend from bearish to neutral and potentially bullish if momentum gains pace.
However, caution is warranted. The lower bound of the falling channel has demonstrated only two clean touches, rendering it structurally fragile. If Bitcoin loses the crucial support zone of $93,900 to $92,800, a deeper price retracement could ensue, complicating the bullish narrative and challenging the notion of an extended market cycle.
At this juncture, everything hinges on one pivotal decision point. A successful move above $100,300 could stabilize prices, whereas a drop below $93,900 could escalate downward momentum, complicating the outlook for Bitcoin in the near term.
