Bitcoin’s recent drop in price, after hitting a high of nearly $ 69,000, has been quite significant. The low during the correction was made at $ 56.5,000 and that may have been the low. After that, we saw a jump in price, but Bitcoin was rejected at $ 60,000 and dropped to $ 57.5,000. Even after that, we can assume that Bitcoin will not break the $ 56,000 mark and that this will be the bottom for this correction. The most recent correction is close to 20%, which is what we’ve seen on average in significant BTC corrections.
Why could $ 56.5k have been the bottom?
Whenever the price of Bitcoin crashes quickly, we see a domino effect triggered by collapsing stop losses and liquidations in the futures market. But we didn’t see much of it this time. Yes it was there, but the amount was surprisingly small compared to what we would normally see in a crash like this. There was around $ 600 million in liquidation, which is significantly less when compared to the BTC market. The open interest on the stock exchanges also showed no abrupt changes and the leverage was not extreme either.
We can also take a look at the fear and greed index to get an idea of the next move in the market. When there is too much greed, we often see a dump, and too much fear is followed by price spikes. Following the recent drop in prices, the fear and greed index has fallen below 40, which indicates fear, and has now risen to 50, which is neutral. This indicator shows that there is still a pump left as people are unlikely to deflate at that price.
In order for the bull run to resume, BTC needs to break the $ 60,000 mark and confirm support for it. $ 60,000 is a baseline level both technically and psychologically, and it’s going to be something the cops have to conquer. We are currently still seeing a lot of Ling traders, which means we could see prices rise again soon. It will be necessary to see if BTC retests 56.5k before going up.
What do you think of $ 56,5,000 being the bottom of the recent Bitcoin price drop? And do you think we’ll test the level one more time before we level up? Let us know in the comments below. If you found our content informative, like it and share it with your friends.
Also read: Australia’s Commonwealth Bank finds that participating in crypto is riskier.
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