Bitcoin Could Drop to $70K–$80K as Final Leverage Flush Looms
Bitcoin investors might be in for another round of market drama. Cryptocurrency analyst James Check cautions...
Quick overview
- Bitcoin investors may face further market volatility as some leveraged positions remain, potentially driving prices down.
- The recent sell-off was a rare 2-sigma long liquidation event, resulting in Bitcoin dropping to a seven-month low of $82,000.
- Despite signs of a local bottom and oversold conditions, risks of further liquidations and market shocks persist.
- Whales holding 1,000 to 10,000 BTC are still selling, which could hinder Bitcoin's recovery until they stop.
Bitcoin investors might be in for another round of market drama. Cryptocurrency analyst James Check cautions that while a lot of the leveraged positions have already been wiped out, there could still be a few ‘stragglers’ out there that could push the price down even further.
He reckons the recent sell-off was one of those extreme market moves that you only see once in a blue moon – a 2-sigma long liquidation event – that basically cleared out all the traders who’d borrowed too much money to invest in Bitcoin. And just to put that into perspective, over ten days, Bitcoin lost a cool $24,000 and dropped to a seven-month low of $82,000 on Nov. 21
Signs of a Local Bottom and Being Really Oversold
Now, there’s still a risk of further liquidations – but the tech indicators are saying that maybe, just maybe, we’ve seen a local bottom. Augustine Fan, head of insights at SignalPlus, points out that the markets are clearly oversold according to just about every measure you use – and when that happens, you can sometimes get a bounce.
Key factors that’ll be influencing short-term price action:
- Being oversold is a clear sign of a short-term stabilisation.
- There’s some price support around $78,000.
- Look at all those Bollinger Bands – they’re screaming that we’ve hit an extreme low.
Fan is careful to say, though, that despite all the positive signs, new stuff can come along and upset the applecart – like another forced sell-off or some market shock.
The Whales Are Still Selling
Blockchain analytics are a good reminder to stay cautious: CryptoQuant analysts say a rebound may be underway, but it’s still a bit too early to say for sure. What they do see is that the bigger players – the 1,000 – 10,000 BTC whales are still selling. Carmelo Alemán at CryptoQuant says that, if you look at on-chain data, those whales continue to sell off, which is preventing the market from making a full recovery.
Now, this redistribution of Bitcoin might actually help the market in the long run – but until the whales stop selling, Bitcoin’s still going to be a bit vulnerable to another dip. Traders are really keeping an eye on what those whales are up to, alongside all those technical indicators, to see if this stabilisation is going to stick or if another sell-off is around the corner.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Save