Amid the current fluctuations in the cryptocurrency market, the price of Bitcoin jumped 1.7% in the last 24 hours, hovering above the $62,000 mark.
However, recent warnings from CryptoQuant, a leading crypto analysis platform, suggest that Bitcoin could face a significant decline to $52,000 if specific key levels are violated.
The warning comes amid growing uncertainty in the Bitcoin derivatives market, with derivatives traders exercising unprecedented caution compared to previous halving cycles.
Bitcoin Risk Level
CryptoQuant's analysis highlights falling open interest and funding rates in the Bitcoin derivatives market, indicating a “cautious” stance from traders, especially with the arrival of several institutional participants. CryptoQuant analyst Shiven Moodley noted:
During this halving, derivatives traders exercise much more caution than in previous cases. This season sees the entry of many new institutional players into the market.
According to the analyst, if Bitcoin price falls below the critical support level of $60,000, the leading cryptocurrency could see a notable correction to $52,000, signaling a potential short-term downtrend.
Derived uncertainty
“If the price falls below $60,000, we could see a decline to $52,000 before a further rise.” – By @ShivenMoodley
– CryptoQuant.com (@cryptoquant_com) April 18, 2024
However, the presence of institutional Bitcoin Spot ETFs could mitigate the severity of the decline by absorbing “oversupply from liquidations” around the $60,000 support zone.
Moodley said:
If the price falls below $60,000, we could see a decline to $52,000 before a further rise. However, given the significant dominance of institutional ETFs, I would not be surprised if they accumulate oversupply from liquidations near the near-term support level of $60,000.
Analysts sound alarm on BTC’s fragile position
Meanwhile, cryptocurrency trader and analyst Ali further fueled concerns by identifying a crucial price level for Bitcoin. Ali's analysis indicates that if Bitcoin falls to $50,500, more than $15 billion in liquidations could take place on Binance alone.
#Bitcoin a drop to $50,500 would trigger more than $15 billion in liquidations. #Binance alone! pic.twitter.com/9wQTVwprgx
– Ali (@ali_charts) April 17, 2024
Such a large liquidation event could put immense pressure on the market, potentially leading to further price declines and increased volatility.
This outlook echoes recent warnings from prominent analyst Crypto Rover, who also warned of a potential liquidation event affecting short position holders if Bitcoin climbs back to the crucial $71,600 price mark.
Despite these concerns, some analysts remain optimistic about Bitcoin's long-term prospects. Crypto analyst Plan B, known for his Stock-to-Flow (S2F) model, has makes bullish predictions for future price movements of Bitcoin.
According to Plan B, Bitcoin's upcoming halving event will serve as the central driver of the price rally, with the cryptocurrency expected to surpass $100,000 this year and surpass $300,000 by 2025.
Featured image from Unsplash, chart from TradingView
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