Analysts have sounded a warning about a potential significant Bitcoin price correction if the leading cryptocurrency fails to maintain support above the crucial level of $56,000.
Bitcoin has been trading around the $60K mark in recent days, following a drop to58,601 earlier this week. The highest point reached this dip was $62,293 before stabilizing around the $61K range.
While this stability has allowed some alternative cryptocurrencies like Solana to experience minor price recoveries, market observers suggest that the threat is far from over.
Bitcoin’s Defense at $58
According to a recent analysis by CryptoQuant, Bitcoin’s strongest support level lies at $56,000. This implies that any significant bearish volatility can be defended at this particular price point. CryptoQuant emphasized that failing to protect this threshold trigger another substantial price correction.
In another analysis, Willy Woo attributed Bitcoin’s recent retest of the $58,000 level to excessive leveraged positions that needed be and selling pressure from miners.
Woo noted that speculators have been increasing positions again and highlighted that the market is not yet ready for an uptrend without a significant reduction in such. Consequently,
Woo suggested
that Bitcoin might further decline to $54,000.
Market-wide Surge Prerequisites
Despite these bearish forecasts,
Quant stressed
that the market remains in a bullish phase although it is currently its weakest since March 2023 A key factor supporting this bullish case is sustained demand for Bitcoin.
The demand from long-term BTC holders is currently growing at a rate of 72,000 Bitcoins per – an improvement compared with 68,000 BTC in May but slower than the 160- thousand monthly BTC demand seen in Q1 2024 which led up to Bitcoin’s record high during that period. Therefore,
CryptoQuant argued
that there needs to be increased demand from long-term holders for prices to rally further.
Moreover,
the report pointed out
that U.S. investor interest in Bitcoin has recently dipped into negative territory – historically U.S. investor interest growth has corresponded with increases in Bitcoin’s value.
In addition,
stablecoin liquidity growth has slowed down significantly; with USDT market cap’s sixty-day increase dropping from almost thirteen billion dollars late April down to two and half billion dollars by June;
CryptoQuant stressed
this as being its slowest pace since late 2023 and underlined how faster liquidity growth from stablecoins would be necessary for prices on cryptocurrency markets globally as well as bitcoin specifically.
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