Institutional Investment Hype vs Fears of Market Corrections-—Here’s What May Dominate the Bitcoin (BTC) Price Rally

After failing to start the monthly trade on a bearish note, the crypto markets are trying to cope with the latest bearish trend.   As a result, the Bitcoin bulls have managed to elevate the levels above $84,000 at the moment, but it does not appear to prevail for long as the bulls seem to have invested most of their strength. Despite the token’s uncertainty, the institutions remain highly optimistic. BlackRock’s CEO believes Bitcoin could replace the dollar, while MicroStrategy accumulates more BTC. 

Regardless of the growing optimism around the token, the bulls are failing to attract the required buying pressure, keeping the price consolidated. Does this suggest the fear of market corrections among market participants has been outweighed by the bullish projections laid by excessive accumulations by the institutions? Will Bitcoin’s price remain consolidated and fail to rise above $90,000?

The investors continue to remain fearful as key metrics point to a potential cooling-off phase. Here’s what’s happening right now:

Sharpe Ratio Dips to Neutral

Sharpe ratio accesses the risk-adjusted return of Bitcoin, displaying the average return after eliminating the risk-free rate per unit of volatility. A good Sharpe ratio is considered when the levels are greater than 1.0. Levels higher than this range are considered excellent. Meanwhile, the Sharpe ratio has dropped back below 0 after recovering from -3.064. This suggests reduced risk-adjusted returns. Similar patterns were seen in 2016, 2019, 2020, and 2023 that preceded consolidations or corrections. 

Short-Term Holders in Panic Mode

Bitcoin SPOR or Spent Output Profit Ratio, is calculated by dividing the realized value by the token’s value during its creation. It indicates whether the sellers are in profit or loss, assuming every moved token on the blockchain is being sold. A SOPR value above 0 usually indicates that coins moved between wallets during that period are in profit. However, the levels have dropped below 0, meaning many short-term traders are selling at a loss. Historically, this metric dipping signals capitulation but also the potential recovery once selling pressure fades. 

Technical Indicators Suggest Weak Momentum

The price of Bitcoin is trying hard to rise above the ascending trend line that it lost during the first fortnight of March. Meanwhile, the bearish clouds continue to hover over the BTC price as the technicals do not support a bullish narrative. The MACD is heading for a bearish crossover while being within a negative range. This suggests a drop in bullish strength while the 50/200-day MA is close to experiencing a bearish crossover. This hints towards a potential pullback to be on the horizon. 

Moreover, the reducing OBV, or on-balance volume, also signals a drop in buying interest. Therefore, the Bitcoin price may continue to face upward pressure, but until it holds the support at $83,000, the bullish narrative may remain active. A breakdown below may drag the levels to $80,000, while a rise may help the BTC price break above $85,000.