BTC corrects amid profit-taking after impressive rally, how low could it go?

After rising to an all-time high of just below 100k last week, Bitcoin fell across the weekend and has fallen further at the start of the week, reaching a low of 92.5k at the time of writing. 

The pullback from the 100k key psychological level comes as traders book profits amid outflows in ETFs and as risk appetite falters. However, assets rally rise in a straight line, and a healthy pullback can help bring the price out of overbought territory. 

Bitcoin has traded over 5% lower over the past 24 hours as traders booked profits after the 40% run-up following Trump’s election victory. While optimism of crypto-friendly regulation helped drive Bitcoin sharply higher, the price has pulled back after failing at the 100k crucial milestone. The 5% selloff triggered $575 million in liquidations over the past 24 hours, with over $150 million in Bitcoin alone. 

Profit taking pressurises BTC 

The downturn appears to represent a routine market correction triggered by profit-taking from short-term investors. CryptoQuant pointed to the Adjusted Spent Output Profit Ratio (aSOPR), which measures whether investors are selling their BTC at a profit or loss, is at 1.049. A reading above 1 indicates they are selling for a profit, pressurizing Bitcoin’s price.  

BTC ETFs record outflows  

The fall in Bitcoin’s price came as spot Bitcoin ETs saw the largest daily net outflows since the US election. US spot BTC ETFs recorded net outflows of $438.37 million on Monday, marking a sharp reversal following record-breaking net inflows across the previous week. This points to a shift in market sentiment. Should the selloff in BTC ETFs persist the Bitcoin price could come under more pressure. That said, it is completely normal for bullish runs to pull back and pause. A sign that ETFs are buying the pullback in the BTC price could help cushion declines.  

Corporate activity could support the price 

While BTC ETFs are having a rare down day, corporate buying of Bitcoin could help support the price. Rumble (RUM), an online video platform that hosts Truth Social, announced that it will start using a portion of its excess cash reserves to buy up Bitcoin. This update comes as MicroStatretgy bought a further $5.4 billion worth of Bitcoin last week. Corporate inflows will likely represent an increasingly important source of capital inflows.  

Could BTC’s correction have further to run? 

Despite this week's pullback, the fear and greed index is still at 79, indicating extreme greed. While this is down from the 90 extreme greed level seen last week, it suggests that the market correction could still have more to run.  

The RSI remains in overbought territory on the monthly and weekly charts. However, Bitcoin is no longer overbought on the daily chart, and the uptrend remains intact.  Should sellers extend the selloff, support can be seen at 90,000, the round number, with 85,000 coming into focus thereafter. 

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