After one of its most bloody days in 2021, Bitcoin is trying to reclaim critical support above $58,000. A daily close north of this target could push BTC’s price back to the $60,000, but still a long way from a confirmed recovery.
As of press time, Bitcoin trades at $58,137 with sideways movement in the daily chart.
Bitcoin started its downward trend immediately after scoring a new-all time high at $69,000. The benchmark crypto lost support at $60,000 after a relentless battle between bulls and bears and took another leg down finding support at $55,600.
As many experts claimed, the market was over-leverage and open for a liquidation cascade, as it happened in May and July this year. Since then, the price of Bitcoin has dropped around 17.26% from its ATH.
In turn, the general sentiment in the market has taken a dip, but still remains fairly optimistic. Funding rates across crypto exchange platform turned neutral suggesting that short-term traders have been shakeout, at some extent.
On average, Bitcoin has experience 27%, 24%, and 54% correction from its all-time high, according to data from UTXO Management. This metric, combine with the neutral funding rates, suggest BTC could see more downside price action.
In the short term, Bitcoin has support on $55,000 with seemingly the road clear for a bounce into $60,000. The sustainability of this upward movement has been put under questioning, as some believe there is still too much leverage in the market getting in the way of a fresh all-time high.
On-Chain analyst Jan Wuestenfeld said the following about BTC and the current state of the market:
So far, the drawdown of #Bitcoin’s price is comparably minimal. #Bitcoin and crypto Twitter are still relatively calm. If you go just by that, the price might be in for some more downward moves before we reach levels of desperation that shake out the last weak hands.
Bitcoin On A Multi Year Bull Market
In the long term, the general consensus seems to be that Bitcoin still moves on a bullish trajectory. From a low at $3,000 in 2021 to an ATH near $70,000, the benchmark crypto maintains its fundamentals and benefit from a favorable macro-economic outlook for risk assets.
Inflation concerns seem to be driving more people into crypto as a hedge against its rise and a mechanism to generate yield as trust in financial institutions diminishes.
At the same time, the U.S. dollar has strengthened in the past 2 weeks due to an increase in macro risk, an extended rally could make Bitcoin rise to uncharted territory more difficult.
The benchmark crypto seems poised for more gains in Q4 this year, but the market could demand another blood sacrifice. Senior Commodity Strategist for Bloomberg Intelligence Mike McGlone believes $50,000 will operate as support for BTC meanwhile $100,000 as resistance as the cryptocurrency consolidates another year in appreciation.