Bitcoin Teeters on the Brink: $95,000 Support Threatened by Overvaluation Risks

Bitcoin has managed to maintain strong support at $95,000 for some time. However, this level could face challenges as the cryptocurrency’s overvaluation may lead to a correction.

If this support is broken, Bitcoin could experience a drop, potentially reaching as low as $92,000, which would trigger further concerns for investors.

Bitcoin Is Facing Trouble

The Network Value to Transactions (NVT) ratio is currently at a five-month high, a level last seen in September 2024. The NVT ratio, which measures the relationship between Bitcoin’s network value and transaction volume, suggests that network value is far higher than actual transactions. This imbalance typically indicates that Bitcoin is overvalued, historically acting as a trigger for price corrections.

The rising NVT ratio signals that Bitcoin’s price may not align with its underlying network activity, suggesting a potential mispricing. As this imbalance continues, the chances of a price correction increase, meaning Bitcoin might face a drop toward lower support levels unless its network activity can catch up with its valuation.

Bitcoin NVT Ratio Source: Glassnode

Bitcoin’s broader market momentum is showing mixed signals, with the Fear and Greed index nearing the Greed zone. The index, which tracks market sentiment, is on the verge of transitioning from Neutral to Greed, often indicating that the market may be nearing local tops. This shift suggests Bitcoin could be overvalued, with the potential for a correction if the sentiment overheats.

Historically, when the Fear and Greed index enters the Greed zone, Bitcoin has experienced pullbacks as the overvaluation triggers profit-taking. The future of Bitcoin’s price will depend on how sentiment evolves in the coming days.

Bitcoin Fear And Greed Index. Source: Glassnode

BTC Price Prediction: Staying Above Support

Bitcoin is currently trading at $96,273, holding above its critical support level of $95,869. For now, Bitcoin is also staying above its uptrend support line, which has provided a buffer against a further price decline. If these levels hold, Bitcoin could maintain stability and avoid breaking below key support.

However, if the factors of overvaluation and shifting market sentiment exert pressure on Bitcoin, it is likely to fall below the $95,869 support. This could trigger a decline toward $93,625, or even as low as $92,005, extending the losses for investors who are holding during this uncertain phase.

Bitcoin Price Analysis. Source: TradingView

If Bitcoin can find resilience above the $95,869 support, it might see a bounce toward $98,212. Successfully breaching this resistance level could provide renewed bullish momentum, invalidating the current bearish thesis. If Bitcoin pushes above $98,212, the market could see a renewed upward trajectory, restoring confidence in its future potential.

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