Bitcoin
Bitcoin Drops Below $55,000, But Traders Aren’t Scared. Why?
As Bitcoin faces strong headwinds, breaking through two critical support levels at $60,000 and $56,500 in quick succession, it may on the surface appear as if fear is taking hold of the market. There is reason to be fearful, especially for coin holders leveraging BTC on decentralized finance (DeFi) protocols, seeking to borrow against the asset as collateral.
Fear has not yet taken hold of the Bitcoin market
Even with falling prices, an on-chain analyst, talking about X, argues that the market is relatively composed and fear and panic have not yet completely taken over. Pointing to Bitcoin’s Daily Realized Profit Loss ratio, the analyst said that unless there is an increase in the number of addresses in red, indicating panic selling, the market could sustain further losses.
According to the analyst’s assessment, the absence of “panic selling” bars suggests that investors are still processing current events. Even if prices fall below $56,500, the market, the analyst added, could fall as low as $47,000, a level that “doesn’t look as dire as it did three weeks ago when we were at 70,000.”
However, amid this necessary correction, the analyst added that the shakeout should be slower. This way, there will be a more orderly market correction.
On July 5, Bitcoin fell nearly 30% from its all-time highs and is under immense selling pressure. After the drop below $56,500 earlier today, it is evident that the coin is now within a bearish breakout formation. The sell-off forced prices out of the March to May 2024 range. This signals a new phase after the expansions in Q1 2024, when the coin reached $73,800.
Analysts expect further losses with sellers in the driver’s seat and Bitcoin inside a bear breakout formation. So far, immediate support lies at $50,000 and $45,000, marking January 2024 highs.
Best Time to Buy Bitcoin? Wait for This Signal
While the dip is forcing investors to seek refuge in stablecoins, another analyst thinks this could be the best time to get more BTC at a discount. Taking to X, the analyst pointed several fundamental factors that paint an optimistic long-term picture.
Related reading: This dormant Bitcoin wallet with $6.8 million in BTC has been reactivated. Are they selling it?
Some of these tailwinds include the availability of spot Bitcoin exchange-traded funds (ETFs). There is also regulatory clarity in the U.S ahead of the highly contested presidential election. At the same time, the analyst is convinced that the upcoming $16 billion payment by FTX trustees would be a net positive for bullish BTC bulls.
Still, before there is stability and this week’s sell-off is neutralized, there must be a increase in new addresses. Once this is observed, it would mean that new investors are coming in, creating demand for the coin. For now, prices are plummeting, and fewer addresses are being created.
Featured image by DALLE, chart by TradingView