- Bitcoin’s current position hovers around $26,000, but the shadow of a potential slide towards $20,000 looms large.
- Analysis shows Bitcoin may witness further declines, yet some experts maintain hope for a surprise turnaround.
Defending Bitcoin’s Critical $25k Line
In the face of a turbulent market, Bitcoin’s price currently oscillates around the $26,000 mark, having suffered an 11% drop within a week. The bearish momentum is further evident when considering the short-term holders who, even prior to the recent deleveraging of BTC futures, were trading in unrealized loss. With the prevailing winds suggesting the possibility of the digital currency tumbling to a worrying $20,000, bulls are rallying to uphold the $25,000 support/resistance line.
Indicators Signal a Potential Decline
The Relative Strength Index (RSI), a tool often used to gauge the momentum of an asset, suggests the prevailing path of least resistance is leaning downward. This is supported by the RSI standing at 20 – a low unseen since the March 2020 crypto plunge amidst the pandemic’s early days. Despite this gloomy forecast, optimists highlight Bitcoin’s track record. It previously catapulted from a mere $3,800 to its record peak of nearly $70,000, suggesting the potential for an unexpected resurgence.
However, the Moving Average Convergence Divergence (MACD), a fundamental technical indicator in crypto trading, paints a bearish picture. The current sell signal suggests that maintaining short positions in Bitcoin may remain profitable until a significant bullish momentum arises.
The Struggle of Short-Term BTC Holders
Glassnode, a revered on-chain analytics firm, provides some harrowing insights. Their data points to the most substantial single-day sell-off in the BTC futures market in the past year occurring last Friday. The bleak outlook intensifies when considering that 88.3% of Bitcoin held by short-term investors is now in unrealized loss.
A “top-heavy market” is the phrase being bandied about. In layman’s terms, it reflects situations where investors jump into Bitcoin purchases at prices near or even surpassing the prevailing market rate. The repercussions? A potential market saturation, leading to prolonged top-heavy periods.
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Reinforcing this view, Glassnode states,
“Sharp upticks in [Short-Term Holders] Supply in Loss have followed ‘top-heavy markets’.”
Only 11.7% (or 300k BTC) of the total 2.56M BTC held by these investors is currently profitable.
Yet, amidst this bearish scenario, @AltcoinSherpa, a noted crypto trader, advocates resilience. He posits that the most significant dip, from $70k to $15k, has already transpired. His advice to investors: stay resilient and wait for the bull market’s true return.
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