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Analyst Deems Bitcoin’s Dip Below $50K as Unlikely in Near Future

ByDayne Lee

Apr 9, 2024
Analyst Deems Bitcoin's Dip Below $50K as Unlikely in Near Future

Analyst Deems Bitcoin’s Dip Below $50K as Unlikely in Near Future

In the ever-evolving cryptocurrency market, Bitcoin‘s price trajectory continues to captivate investors and analysts alike. A recent analysis by a leading crypto analyst suggests that the likelihood of Bitcoin retracing to the $50,000 mark appears slim in the near term. This prognosis stems from the observed increase in Bitcoin’s support price levels and the current stability within the derivatives markets.

Building Support and Derivatives Market Stability

Dylan LeClair, a senior analyst at digital asset fund UTXO Management, shared insights in an analyst note dated April 7, highlighting the resilience of Bitcoin’s price above the $50,000 threshold. According to LeClair, the increased frequency of Bitcoin establishing higher support levels, coupled with the absence of immediate volatility in the derivatives markets, suggests a bullish outlook for the cryptocurrency.

LeClair posits that if Bitcoin ascends into the $70,000–$75,000 range, it could exert considerable pressure on short positions. “As we’ve consolidated, an increasing amount of short liquidations are building from 70-75k,” he noted, indicating a potential squeeze that could propel the price further.

The Impact of Liquidations

Data from CoinGlass reveals the tangible impact of price movements on market positions. A rise to $70,000 could trigger liquidations totaling approximately $174.17 million. Should Bitcoin achieve the upper limit of LeClair’s forecasted range ($75,000), about $830 million in short positions might be liquidated. This scenario represents a 7.8% uptick from Bitcoin’s price at the time of writing, which stands at $69,344.

Conversely, a 7.5% price decrease, akin to the one experienced on March 15, which resulted in $525.2 million in liquidations, highlights the market’s sensitivity to significant price fluctuations.

Despite the potential for substantial liquidations of long positions in the event of a 27% price drop to $50,000, LeClair remains optimistic. He cites the formation of higher lows and the current calm in the derivatives sector as key factors underpinning his outlook. “While there is a large cluster of longs that could be taken out at ~50k, given the structure of higher lows and the lack of immediate froth in the derivatives landscape currently, I find it pretty unlikely we revisit that level,” he explained, albeit not dismissing the possibility entirely.

LeClair’s analysis is further bolstered by recent developments involving heavyweight financial institutions. Notably, the update to BlackRock’s Bitcoin exchange-traded fund (ETF) prospectus, which now includes ABN AMRO Clearing, Citadel Securities, Citigroup Global Markets, Goldman Sachs, and UBS Securities as authorized participants, signals growing institutional interest in Bitcoin. This move could potentially influence Bitcoin’s market dynamics positively.

Anticipation Surrounding the Bitcoin Halving Event

The crypto community is abuzz with speculation over Bitcoin’s price trajectory ahead of the anticipated halving event set for April 20. This quadrennial occurrence, which reduces miner block rewards by half, has historically been a precursor to significant price movements. According to Cointelegraph, Bitcoin’s price has surged by approximately 658% since the last halving in 2020. Extrapolating from past cycles, Bitcoin could potentially reach a staggering $434,280 per coin by the 2028 halving.

Crypto trader Rekt Capital echoes the sentiment of optimism, suggesting that the market is currently in the early stages of a bull market phase. His analysis, shared with his 443,000 followers, hints at the considerable upside potential in the short term.

  • Price Support Levels: Observations indicate strengthening support levels for Bitcoin, reducing the likelihood of a dip below $50,000.
  • Short Position Liquidations: A price movement into the $70,000–$75,000 range could lead to significant short position liquidations.
  • Market Resilience: The derivatives market shows a lack of volatility, suggesting a stable outlook for Bitcoin.
  • Institutional Engagement: The involvement of major financial institutions in Bitcoin ETFs signifies increased institutional interest.
Price MovementPotential Liquidation ImpactMarket Sentiment
Rise to $70,000$174.17 million in liquidationsPositive pressure on short positions
Rise to $75,000$830 million in liquidationsIncreased bullish momentum
Decline to $50,000Substantial long position risksDeemed unlikely due to current support levels

The confluence of strengthening support levels, institutional interest, and the speculative fervor surrounding the upcoming halving event paints a bullish

Featured image credit: Michael Förtsch via Unsplash

Dayne Lee

With a foundation in financial day trading, I transitioned to my current role as an editor, where I prioritize accuracy and reader engagement in our content. I excel in collaborating with writers to ensure top-quality news coverage. This shift from finance to journalism has been both challenging and rewarding, driving my commitment to editorial excellence.

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