Bitcoin price remains nearly 10% below recent highs, as the major cryptocurrency continues its slump after early last week’s sell off. Since hitting a new all-time high of $61k, BTC has continued to face downward pressure, hovering around the $54,000 price level. The past week’s volatility has resulted in bulls losing nearly $2.6 billion in liquidations, according to ByBt.

Understanding Bitcoin’s Recent Price Action 

There were two major catalysts that led to last week’s sizable drop from $61,000, one of which was the Indian government proposing a bill to ban all private use of cryptocurrencies in the country. The other reason was due to reports claiming that 18,961 BTC was flowing into crypto exchange Gemini. 

With an alleged $1 billion worth of Bitcoin being dumped, investors and speculators began to take profit in anticipation of a steeper selloff. However, this was later proven false as the transfers turned out to be internal.

We have been receiving messages asking about large #BTC inflows into Gemini.

Clarification: This is incorrect, the reported transactions were internal. Those are funds that were already on the exchange's wallets, and were simply transferred internally.https://t.co/o1kYsHMCuo pic.twitter.com/GjecVFfX8Y

— glassnode (@glassnode) March 15, 2021

Since then, Bitcoin has failed to bounce back above $60,000 and continued its downtrend alongside the equities market. With stimulus checks having less of an impact than previously anticipated, the digital asset was unable to gain upward momentum to retest its recent all-time high. 

Bigger Correction May be Ahead 

It’s possible that Bitcoin will brush aside this small correction and continue its rally. However, an important indicator has shown that the cryptocurrency may reach its local top soon. The RHODL Indicator, which is given as a ratio between short-term holders (1 week to 1 month) and long term holders (1 to 2 years), has continued to accelerate throughout the past year. 

The indicator has proven to be effective at identifying the price high of each of Bitcoin’s past macro cycles. When the market is approaching the top of the cycle, the indicator enters the critical red area. This was clearly the case in 2013 and 2017, where Bitcoin suffered major losses. 

While current RHODL levels suggest that Bitcoin is not overextended just yet, it’s certainly getting closer. The Long Term Holder SOPR currently shows that Bitcoin is at a level that’s eerily similar to the second peak in 2017 before the crash — meaning that the local top may be in soon.

Featured image from UnSplash