From cointelegraph by Nancy Lubale

Bitcoin’s BTC$69,663 price rallied more than 10% between Oct. 26 and Oct. 29  to reach $73,600, just 0.2% below the $73,800 all-time high. Currently, Bitcoin price has retraced to $72,300, with several technical and onchain indicators raising concerns about the strength of the recent rally.

Let’s look at the factors that could potentially drive Bitcoin prices lower.

Over 99% of BTC supply in profit hints at overheating

Bitcoin’s recent rally within inches of its all-time highs saw almost all holders return to profit, resulting in fears that profit-taking from current levels could lead to deeper price correction. 

Data from market intelligence firm CryptoQuant reveals that less than 1% of Bitcoin investors were still in a position of loss when the price was at $72,323 on Oct. 31, subsequently accounting for 99% of the supply in profit. 

“99.7% of Bitcoin’s supply in profit,” noted analysts at crypto analytics firm Lab4crypo, adding:

 “We’re likely to see profit-taking increase and some selling pressure build-up.”

The percentage supply in profit and loss evaluates the sum of unspent transaction outputs (UTXO) that are in profit by comparing the price when they were last moved and the current price.

According to market analytics firm Into The Cryptoverse, applying a moving average (MA) can help identify “overheated” conditions when the MA begins to approach 100%.

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Ad“The 50D SMA reaching values of 97% or above has historically been a fairly decent indicator for predicting a (short term) pullback.”

The chart above shows the 50-day SMA at 86.3% and remains on an upward trajectory. As it approaches 100%, it could signal an overheated market, potentially leading to price corrections. 

Bitcoin’s RSI is overbought

The crypto market RSI heatmap by CoinGlass shows that BTC’s RSI is displaying overbought conditions for three out of five timeframes.

Medium intervals display higher RSI values. Bitcoin’s RSI is now at 70 on the daily, 71.41 on the 12-hour and 71.2 on the four-hour timeframes.

This is supported by data from TradingView, which shows BTC’s RSI at 71, 72 and 73 on daily, 12-hour and four-hour timeframes, respectively.

Overbought conditions generally describe recent movements in the price of an asset and reflect an expectation that the price trend may reverse in the near future.

Additional data from Alternative, a platform that tracks “emotions and sentiments” surrounding Bitcoin, showed that the Crypto Fear and Greed Index at 77, or “extreme greed” conditions.

Alternative notes, “When investors get too greedy, the market is due for a correction. 

One of the three recent times this index was in the “extreme greed” zone this year was in March, just before BTC dropped down from its current all-time high of around $73,808 and tumbled toward $56,500 on May 1.

Related: Bitcoin investors pile $875M into BlackRock fund amid crypto rally

Bitcoin price hits resistance above $73K

From a technical point of view, Bitcoin price ran into resistance just below the all-time high at $73,500. Last time, when the price turned away from the all-time high set on March 14, it recorded a 23% loss to $56,500 on May 1, suggesting that the bears are aggressively defending this zone. 

Bitcoin bulls were required to produce a decisive daily candlestick close above this level to sustain the recovery.

Conversely, failure to flip $73,500 and, by extension, the all-time high of $73,838 into support could cause the price to drop lower, with the accompanying long position liquidations pulling the price toward $71,500. 

Data from CoinGlass showed a wall of ask orders building up above $73,000, reinforcing the importance of this resistance area.

Even though these metrics caution investors to manage risks, it is important to note that RSI conditions and percentage supply in profit do not guarantee price corrections, particularly amid multiple tailwinds going into November for BTC price.