With Bitcoin facing strong headwinds, having quickly broken through two critical support levels at $60,000 and $56,500 in quick succession, it may at first glance appear as if fear has gripped the market. There are reasons to be afraid, especially for coin holders using BTC in decentralized finance (DeFi) protocols who want to borrow using the asset as collateral.
Fear hasn’t yet gripped the Bitcoin market
Even as prices fell, one analyst working online, turning to X, claims that the market is relatively calm and fear and panic have not yet fully taken hold. Pointing to the Bitcoin Daily Realized Profit Loss ratio, the analyst said that unless there is an increase in the number of addresses in the red, indicating panic selling, the market could withstand more losses.
The lack of “panic selling” bars, the analyst said, suggests investors are still digesting current events. Even when prices fall below $56,500, the market, he added, could fall to $47,000, which “doesn’t look as bad as three weeks ago when we were at 70,000.”
However, amid this necessary correction, the analyst added that the shake-up should be slower. Thus, there will be a more orderly market correction.
As of July 5, Bitcoin has fallen nearly 30% from its all-time highs and is under tremendous selling pressure. After falling below $56,500 earlier today, it is clear that the coin is now in a bearish breakout formation. The sell-off has forced prices beyond the March-May 2024 range. This signals a new phase after the expansion in Q1 2024, when the coin soared to $73,800.
Analysts expect more losses to come as sellers take over and Bitcoin enters a bearish breakout phase. For now, immediate support is at $50,000 and $45,000, which are the highs of January 2024.
Best Time to Buy Bitcoin? Wait for This Signal
While the drop has investors seeking safe haven in stablecoins, another analyst believes this could be the best time to buy more BTC at a discount. The analyst, speaking to X indicated several fundamental factors which paint a long-term optimistic picture.
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Some of these tailwinds include the availability of Bitcoin exchange-traded funds (ETFs), as well as regulatory clarity in the United States ahead of a highly contentious presidential election. Meanwhile, the analyst is convinced that the upcoming $16 billion payout by FTX trustees will be a net positive for bullish BTC bulls.
However, before stability sets in and this week’s sell-off is reflected, there needs to be a splash in new addresses. Once this is noticed, it will mean that new investors are pouring in, creating demand for the coin. At the moment, prices are falling and fewer addresses are being created.
