As bitcoin faces strong headwinds, breaking two critical support levels at $60,000 and $56,500 in quick succession, it may seem, at first glance, that fear is gripping the market. There is reason to be afraid, especially for coin holders who leverage btc in decentralized finance (DeFi) protocols and look to take out loans using the asset as collateral.
Fear has not yet gripped the bitcoin market
Even when prices plummet, an on-chain analyst, taking x, x.com/AxelAdlerJr/status/1809095544154865751″ target=”_blank” rel=”nofollow”>argues that the market is relatively calm and fear and panic have not yet completely taken over. Pointing to bitcoin’s daily realized profit and loss ratio, the analyst said that unless there is an increase in the number of addresses in the red, indicating panic selling, the market can 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 break below $56,500, the market, the analyst added, may fall to $47,000, a level that “doesn’t look as dire as it did three weeks ago when we were at $70,000.”
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However, amid this necessary correction, the analyst added that the restructuring should be slower, so that a more orderly market correction takes place.
On July 5, bitcoin dropped nearly 30% from its all-time highs and is under immense selling pressure. Following the drop below $56,500 today, it is evident that the coin is now in a bearish breakout formation. The sell-off forced prices down from the range of March to May 2024. This signals a new phase after the expansions of Q1 2024, when the coin reached $73,800.
Analysts expect further losses with sellers in charge and bitcoin in a bearish breakout formation. So far, immediate support is at $50,000 and $45,000, which mark January 2024 highs.
When is the best time to buy bitcoins? Wait for this signal
While the drop is forcing investors to seek refuge in stablecoins, another analyst believes that this could be the best time to acquire more btc at a discount. As for x, the analyst x.com/milesdeutscher/status/1809081209370096055″ target=”_blank” rel=”nofollow”>he pointed several key factors which paint a long-term bullish picture.
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Some of these favorable factors include the availability of spot bitcoin exchange-traded funds (ETFs). There is also regulatory clarity in the United States 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 btc bulls.
Still, before there is stability and this week's sell-off is countered, there must be a x.com/AxelAdlerJr/status/1808814556585578961″ target=”_blank” rel=”nofollow”>upturn into new addresses. Once this is observed, it would mean that new investors are coming in, creating demand for the coin. For now, prices are falling and fewer addresses are being created.
Featured image by DALLE, chart by TradingView
