Bitcoin (BTC) has experienced a volatile few days, with over $100 million in leveraged longs liquidated in the past 24 hours. This triggered concerns about a potential correction towards the $50,000 mark.
The price drop stemmed from three consecutive days of negative price action, pushing Bitcoin from over $62,000 on July 2nd to a low of $57,043 on July 4th. Despite a slight rebound, Bitcoin remains down over 4.5% on the daily chart.
These price movements highlight the importance of psychological levels like $60,000 in gauging the current Bitcoin cycle. This cycle is unique due to the introduction of the first spot Bitcoin exchange-traded funds (ETFs).
ETF Buyers Hold Strong, But For How Long?
Another significant development is Bitcoin falling below the average realized buying price of spot Bitcoin ETF buyers, which sits around $57,979. This price point is considered a crucial support line for many analysts.
However, unlike previous dips, ETF investors haven’t panicked. Data shows only 20.5 million USD in net outflows on July 3rd, with Grayscale’s ETF accounting for most of it at $27 million.
This calmness might be temporary, as panic selling could erupt after the Fourth of July holiday. Additionally, the upcoming Mt. Gox creditor repayments, estimated at $9.4 billion worth of Bitcoin, could introduce further selling pressure.
Correction or Shakeout? Analysts Divided
The recent price drop caused Bitcoin to lose its 200-day trend line for the first time in 10 months. This, according to analyst Rekt Capital, signifies a delayed breakout until Bitcoin overcomes the downtrend established in early June.
Also Read: Bitcoin ETF Honeymoon Over? Funds See $20 Million Outflow as Investors Eye Ethereum ETFs Launch
On the other hand, some technical analysts believe this is merely a shakeout – a short-lived price drop triggered by exiting investors, followed by a quick recovery. Popular Bitcoin investor Elja Boom leans towards this perspective based on technical analysis.
However, analysts at 10x Research warn of a potential revisit to the $50,000 mark due to increasing sell orders.
In Conclusion
The coming days will be crucial in determining the direction of Bitcoin’s price. Whether ETF investors maintain their composure or succumb to panic selling, coupled with the Mt. Gox repayments, will significantly impact the market. With conflicting technical signals, only time will tell if this is a correction or a temporary shakeout.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
