Bitcoin Struggles to Regain Momentum After Deepest Correction in 24 Months

Bitcoin (BTC) is facing headwinds after experiencing its most significant price correction in two years. The recent sell-off pushed a large portion of short-term holders (STHs) into unrealized losses, raising concerns about the short-term outlook for the world’s leading cryptocurrency.

Deepest Correction Since Late 2022

On-chain data from Glassnode reveals that Bitcoin’s price plunged over 16.5% from a high of $63,801 on July 1st to a low of $53,499 on July 5th. This correction marks the deepest Bitcoin has seen since late 2022.

STHs Feel the Squeeze

The sell-off disproportionately impacted short-term holders, with Glassnode data indicating that 83% of the supply controlled by STHs (those holding Bitcoin for less than 155 days) is now underwater. This means their purchase price was higher than the current market value, leading to unrealized losses.

Bitcoin’s Long-Term Resilience Debated

Despite the recent downturn, Glassnode analysts point out that the correction is shallower compared to previous Bitcoin cycles. This suggests a potentially stronger market structure and potentially reduced volatility as Bitcoin matures as an asset class.

Technical Indicators Paint a Mixed Picture

While the recent price drop is concerning, technical indicators offer a mixed view of Bitcoin’s future trajectory. The price is currently hovering around $57,400, facing resistance at the 200-day exponential moving average (EMA) of $58,180. A break above this level could signal a bullish resurgence. Conversely, a sustained drop below $57,200 could lead to further losses towards the $56,000 support zone.

Analyst Opinions Divided

Popular analyst Daan Crypto Trades believes reclaiming the 200-day EMA and holding above $59,000 would be a positive sign for Bitcoin bulls. However, overcoming significant selling pressure around this resistance level remains a challenge.

Block Makes Waves with New Mining Chip

In brighter news for the Bitcoin ecosystem, Block (formerly Square), led by Jack Dorsey, recently announced its first sale of 3-nanometer (3nm) Bitcoin mining ASICs to Core Scientific, a leading Bitcoin mining company. This new mining technology is expected to offer increased efficiency and accessibility for Bitcoin miners.

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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