Bitcoin (BTC) price has barely recovered from the collapse in momentum seen over the past few days.
However, the cryptocurrency appears to be at risk of further decline due to bullish rather than bearish investor sentiment.
Bitcoin faces a problem
The price of Bitcoin fell from $62,000 to $53,300, shocking the crypto market and killing many bullish dreams. The futures market saw long liquidations of $263 million in three days.
This is the second largest liquidation in the last two weeks, with the previous high being three months ago in April. Typically, such large liquidations calm investors and force them to step back and let the market cool.
However, BTC holders seem to disagree with this view. The decline is believed to be due to the impact of Federal Reserve Chairman Jerome Powell’s bearish speech earlier this week. As such, investors are expecting a quick recovery and are ready to take advantage of it.
Analyst Willy Woo highlighted this in his explanation of the difference between buying futures and buying spot. He pointed out that the former leads to a bearish environment and said that this could lead to further losses.
According to the Bitcoin Open Value Oscillator, there are still about half a million long contracts open in the futures market. If the price of Bitcoin falls further, these long contracts could be liquidated. This would lead to an extended period of bearish trend for BTC.
BTC Price Prediction: Pattern Check
Bitcoin, which was $56,961 at the time of writing, is stabilizing after it nearly fell to $53,300 yesterday. The cryptocurrency has yet to make the expected 17% loss that occurred due to the double top formation four months ago.
This forecast is targeting a drop to $50,900, which will lead to massive long liquidations as mentioned above. If BTC loses its $55,000 support, this will become more likely.
On the other hand, if Bitcoin price can bounce off $55,000 and move back to $58,800 support, a recovery could begin. This would allow a rally to $60,000 to disprove the bearish thesis.
