Bitcoin (BTC) is currently showing resilience above $90,000, yet several risk metrics indicate a potential for significant corrections. CryptoQuant’s risk-off oscillator remains close to the ‘High-Risk’ area, historically signaling imminent corrections and diminishing bullish tendencies.

Key Insights:

• The risk profile for Bitcoin is lingering near the ‘High-Risk’ zone, suggesting a bearish outlook.
• Profit/Loss sentiment for BTC has plunged to a rare low of -3, indicating a possible structural correction.
• A -32% drawdown suggests Bitcoin is in a precarious state, oscillating between correction and capitulation zones, possibly extending the decline within the $90,000 to $80,000 range.

Bitcoin’s Weak Structure Near $90,000

CryptoQuant’s Risk-Off model combines six crucial metrics—downside volatility, upside volatility, exchange inflows, funding rates, futures open interest, and market cap movement—to evaluate market conditions. With indicators positioned near 60, the likelihood of correction stays high.

Bitcoin risk-off signal. Source: CryptoQuant

Bitcoin analyst Axel Adler Jr pointed out that the profit/loss metric is at -3, showing a severe concentration of unprofitable UTXOs. Similar levels have historically coincided with bearish trends and extended cooling periods. Although the current -32% retracement surpasses typical cycle pullbacks (-20%-25%), it remains above capitulation thresholds (-50% to -70%), placing Bitcoin in an uncertain ‘intermediate zone.’

Adler remarked that without improvement in broader economic conditions and on-chain profitability, the chances of continued downward movement are significant, even with Bitcoin stabilizing around $90,000.

Percentage drawdown of Bitcoin price from all-time high to historical lows. Source: Axel Adler Jr.

At this moment, on-chain data from Glassnode provides a slight silver lining. Their insights indicate that Bitcoin’s recent decline prompted the most substantial increase in realized losses since the FTX crash in 2022, predominantly affecting short-term holders (STHs).

In contrast, losses among long-term holders (LTH) seem less severe. This pattern typically reflects a level of resilience among core holders, which has often bolstered against deeper market capitulations in previous cycles.

The Challenge of Reaching $100,000

An analyst from CryptoQuant characterized Bitcoin’s challenge to reach $100,000 as a potential ‘psychological hurdle.’ While a breakout might reignite bullish momentum, major psychological levels can often bring about volatility and frequent breakdowns.

BTC’s growth rate difference (Market Cap vs. Realized Cap). Source: CryptoQuant

The disparity in growth rate (Market Cap vs. Realized Cap) is currently at -0.00095, suggesting that market cap is diminishing quicker than realized cap. With Bitcoin priced at $91,000, analysts lean towards identifying structural weakness rather than trend expansion.

Trader Byzantine General also expressed concerns over Bitcoin’s price behavior, noting:

“$BTC is struggling a bit here at this key resistance level. If it breaks through, it could fly over 100,000 very quickly, but if it actually rejects here, then we’re probably stuck in this 92,000-82,000 range for a while.”

This article is not intended as investment advice. All investment strategies involve risk, and readers should perform their own assessments before making decisions.