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Bitcoin briefly fell below $60,000 due to outflows from US spot ETFs, a more hawkish Fed, and a stronger dollar.
This situation has increased concerns that the decline could turn into a prolonged bear market.
At this point, analysts say Bitcoin is at a critical juncture, while one analyst argues that it’s still too early for $BTC to recover and that a drop to $55,000 is possible.
Speaking to CoinDesk, FxPro senior market analyst Alex Kuptsikevich stated that it is still too early to expect a full-scale recovery for Bitcoin.
Noting that Bitcoin is currently trading near its 200-week moving average, Kuptsikevich stated that the last three times $BTC fell below this level, a long-term bear market occurred instead of a recovery.
At this point, Kuptsikevich noted that the $61,800 to $62,000 range is a key short-term support level, arguing that a break below these levels could drop Bitcoin to $55,000.
Besides Alex Kuptsikevich, another analyst identified $58,000 as a critical level for $BTC.
According to on-chain analyst Reflection, if $BTC falls below $58,000, it could face a risk of $1.6 billion in long liquidations.
The analyst stated that he had never seen such intense long position liquidity in a single range throughout his trading career. He warned that if the price falls below $58,000, over $1.6 billion in long positions would be liquidated, potentially harming all investors who had anticipated a market bottom. He added that the best time to buy is not when the market seems safe, but rather during the most painful moments.
The analyst argued that once all liquidity is depleted, there will be no significant selling pressure left, claiming that all past market bottoms have formed in this way.
*This is not investment advice.