- Bitcoin holders’ loss trends show that bulls could be optimistic about recovery
- If historical trends repeat themselves, a deeper price correction may be in order.
Bitcoin [BTC] It faced rejections from its short-term highs of $58.8K twice in two days. After losing the psychological support of $60K last week, the sentiment across the market was fearful.
There is some hope for a recovery, though. At the time of writing, the increasing accumulation trend suggests that buyers were willing, but other metrics suggest more pain is likely.
source: Axel Adler on X
in Share on Xcryptographer Axel Adler He drew attention to the current average losses for short-term holders (STHs). While the losses matched those of June 2023, they were much smaller in magnitude than the pain we saw in 2021 or 2022.
While it indicated a potential local bottom, it also showed that traders and investors should prepare for the worst-case scenario of a sharp price drop on the charts.
Evidence That Bitcoin’s Local Lows Are Behind Us
source: CryptoQuant on X
CryptoQuant noted that the trader realized a profit/loss margin of -17%. This was in the same ballpark as the market bottomed out over the past two years, reinforcing the idea that Bitcoin is more likely to rally higher than lower.
source: Ki Young Joo on X
According to the founder and CEO of CryptoQuant, Ki Young Joo, Whales tend to use leverage at cyclical bottoms, making markets over-leveraged and forcing another price drop.
At the time of writing, whales were not overly leveraged, which could have paved the way for a deeper correction below the $50,000 level.
Traders feel humbled after trying to catch the breakout and ATH
source: Cryptoquant
From the last week of May to July 3, the estimated leverage ratio on exchanges rose rapidly. During that period, the price of Bitcoin was between $67,000 and $69,000. As the price fell below $66,000, the leverage ratio rose again, indicating that traders were trying to time their exit from greed.
Over the past week, their hopes have been dampened by Bitcoin’s continued decline. The leverage ratio has also decreased, which could be healthy for the market.
Read Bitcoin [BTC] Price forecast 2024-25
Overall, it is difficult to say with certainty that Bitcoin has formed a bottom.
several Bottom signals It was blinking and seller pressure may start to ease. However, investors should still have a plan of action in case the price drops below $50,000.
