Bitcoin (BTC) has fallen below $59,000 over the previous 24 hours. Following the drop, it soon recovered and rose above the psychological threshold of $60,000. Renowned on-chain expert Willy Woo commented on the latest price drop, saying that despite the market’s progress in reducing excessive leverage, the decline in Bitcoin is still not over.
Factors in the Price Drop of Bitcoin
The Mt. Gox exchange’s announcement on June 24 about a repayment plan for Bitcoin and Bitcoin Cash had a big impact on the recent drop in the cryptocurrency’s price. Wu explained that this news affected the market’s high leverage ratio, and $62,500 was the initial target price for Bitcoin. The expert added that the price fell to $58,000 because of additional liquidations because of speculative long positions.
The decline sped up with a cascading long-position squeeze. Despite the initial drop in leverage, several traders established fresh long positions, resulting in significant liquidations. This increased the downward pressure on the Bitcoin price.
A major reason for the price drop is still the miner surrender after the fourth block reward halving. Bitcoin miners are currently selling in large quantities as they need money to upgrade their mining equipment and deal with the growing problems. This also puts pressure on pricing.
Future prognostications and short-term rebound
However, Woo stressed technical signals suggest Bitcoin could see a slight uptrend. In fact, Bitcoin has bounced back from around $59,000 levels and is currently trading at around $61,000. The analyst warned that the market is still in a precarious position despite this comeback. He stressed that the sustainability of Bitcoin’s upward momentum depends on a large but unrealized decline in futures contracts.
Woo believes there is a substantial possibility of Bitcoin falling further. The analyst identified the $54,000 level as a significant threshold to monitor. He believes that a dip to this level might set off another wave of liquidations, propelling the largest cryptocurrency into an even harsher decline. This level may also exacerbate the downward trend by driving Bitcoin’s price below the average cost basis of short-term holders.
Woo further underlined that $54,000 is a crucial line that separates bullish and bearish market patterns. It is very important that the price stays above or below this level, given the current macroeconomic environment. If we stay above this barrier, Bitcoin could see a remarkable comeback and rising momentum.
