Why Bitcoin Might Experience a Pullback Despite Recent Price Surge

Coin World News Report:
Bitcoin surged 7.96% in the past week.
Market fundamentals indicate that Bitcoin may soon undergo a market correction.
As expected, Bitcoin [BTC] had a strong October. Despite a rocky start to the month, the cryptocurrency’s gains have significantly outweighed its previous losses.
Since reaching a low of $58,867, BTC has surged to $69,000 in July.
In fact, at the time of writing, Bitcoin’s trading price is $69,028. This marks a 7.96% increase in the past week and a 9.52% increase on the monthly chart.
The recent surge has left analysts both optimistic and pessimistic. For example, CryptoQuant analyst Burak Kesmeci cited the NVT Golden Cross, suggesting that Bitcoin may experience a market correction.
Market Sentiment
In his analysis, Kesmeci believes that Bitcoin’s NVT Golden Cross has entered a hot zone in the short term.
According to him, the market will eventually undergo a pullback before attempting another upward trend.
For the unfamiliar, a NVT Golden Cross reaching a hot zone indicates that BTC is currently overpriced compared to its network activity.
Therefore, it has been overvalued relative to the value transferred on the blockchain.
This implies a potential overbought condition, where price growth is not supported by fundamental network usage.
These situations typically occur before price adjustments, where the market realigns prices with network fundamentals.
Based on this analogy, Bitcoin is expected to experience a pullback in the short term.
What Bitcoin’s Charts Show
As Kesmeci observed, the current fundamentals do not support a sustained rebound and may decline to meet demand.
Therefore, the question is how sustainable the current rebound is and what market indicators suggest.
The first indicator to consider is Bitcoin’s NVT ratio, which measures the ratio of network value to transactions.
According to CryptoQuant’s data, the NVT ratio has been increasing in the past week. This growth indicates that BTC is overvalued compared to actual utility and network activity, making the high price unsustainable.
Additionally, Bitcoin’s stock-to-flow ratio has decreased in the past week, indicating an increase in supply. Increasing BTC availability tends to bearish the market, especially when demand does not grow.
Lastly, Bitcoin’s price DAA divergence has remained negative in the past week. This indicates that the price surge is unsustainable.
When the DAA price is negative, it means that the current rebound is driven by speculation or short-term demand.
Read
Bitcoin [BTC] Price Predictions
2024 – 2025
In summary, despite BTC surging to recent highs, market fundamentals indicate an imminent pullback. Therefore, the current rebound is primarily driven by speculation rather than demand support.
Once corrected, Bitcoin is expected to fall to a support level of $65,872.