Is Bitcoin’s 40% Drop Just the Beginning? Discover 4 Shocking Reasons!

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<a href="https://investment-policy.com/btc-usd/">Bitcoin</a>’s 40% Correction Could Still Get Worse: 4 Reasons Why

Bitcoin is currently trading around $68,500. After falling about 40% from a peak of $98,000 in mid-January, the recent recovery from a low of $60,000 in February appears to be losing momentum.

While the recent price increase within a defined channel might seem like a positive turnaround, several indicators suggest caution. A discrepancy between price movement and the Relative Strength Index (RSI), weakening long-term investor confidence, limited losses for short-term holders, and a pattern indicating potential liquidations all suggest a possible downturn.

Hidden Divergence Flashes Inside an Ascending Channel

Since early February, Bitcoin’s price has been moving within a consistent upward trend channel when looking at daily price movements. This pattern appeared after a significant drop in price, from around $98,000 down to $60,000. These types of upward channels, which form after a large price decrease, often suggest the price will continue to fall rather than rise after a period of stability.

The Relative Strength Index (RSI) is showing a sign that the price might soon continue falling. This signal, called a hidden bearish divergence, appears when the price makes a lower peak, but the RSI makes a higher peak. This suggests that while the price has recently recovered a bit, the overall downward trend is likely to pick up again.

A comparable pattern occurred between February 2nd and March 4th. Once that pattern was identified, the price of Bitcoin decreased by 11% in the days that followed. We recently saw a similar signal on March 25th, and Bitcoin’s price has been falling ever since.

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The price is nearing a key support level. If the price closes below this level for a day, it would signal a likely downward trend. While a recent dip in the Relative Strength Index (RSI) suggests a pullback, it doesn’t tell us how far the price might fall. Analyzing on-chain data can help confirm whether this pullback will reach the lower end of the current price range.

Conviction Is Fading While Short-Term Losses Stay Shallow

Glassnode, a data analytics firm, tracks how much Bitcoin long-term holders (wallets holding BTC for over 155 days) are buying or selling. Their metric, which looks at changes over a 30-day period, showed a peak in buying on March 15th, with 46,462 BTC accumulated. However, by March 26th, this accumulation dropped to 35,278 BTC, representing a decrease of about 24%.

Although there’s been a small increase recently, the overall trend since mid-March has been downwards. Long-term Bitcoin holders, who are usually very confident in the market, are buying less, even though the price is currently rising. This suggests they don’t believe this increase will last.

The way people who’ve held Bitcoin for a short time are behaving adds to the overall risk. Currently, these short-term holders are showing a net loss of 0.21, meaning they’ve collectively lost money. This level indicates they are likely selling off their Bitcoin, which is a sign of market weakness.

Although Bitcoin reached $62,800 in early February, an indicator called NUPL for short-term holders fell to -0.47, signaling strong selling pressure. Currently, at $68,500, that number is -0.21, meaning short-term holders have fewer losses than they did during February’s low point. If this trend of weakening confidence continues and prices fall below a key support level, these holders might start selling, which could speed up a price decrease.

Looking at blockchain data, we’re seeing a subtle decrease in market confidence. The derivatives market will tell us if traders have prepared for this shift or are still vulnerable to potential losses.

Bitcoin Price Faces a Long Liquidation Wall at $64,000

Gate’s data on active trades over the past 30 days suggests traders are generally optimistic. There’s currently $4.21 billion in long positions (bets that the price will go up) facing potential liquidation, slightly more than the $4.13 billion in short positions (bets that the price will go down). Although this seems fairly balanced, the high amount of long leverage creates risk, and is one reason analysts anticipate further price drops, especially given the market’s current volatility.

Even though the market has dropped almost 40% and is still falling, most traders are still betting that prices will go up.

A large concentration of traders who would be forced to sell (liquidated) if the price drops is currently around $64,100. There’s about $3.55 billion worth of buy orders (long leverage) at that price, meaning 84% of all existing buy orders would be automatically closed if the price hits or goes above $64,100.

Reaching $64,100, around the $64,000 level, would be a significant price point, as it coincides with a key Fibonacci retracement level. This makes it a critical area to watch for both technical traders and those involved in derivatives.

Right now, Bitcoin’s price is being tested around $68,700. If it doesn’t stay above this level, it could fall to around $66,400, which is supported by a key trendline.

If the price falls below its current support level, the next significant price point to watch is $64,100. A drop to this level could trigger a large sell-off, potentially causing the price of Bitcoin to fall to $60,900 or even $56,800, which would deepen the recent 40% price decline.

Bitcoin needs to rise above $71,500 to ease the current downward trend. A stronger, more confident increase would only happen if it breaks past $76,100.

If the price of Bitcoin falls below $66,400, it could signal a downward trend and trigger $3.55 billion worth of forced selling. However, if the price rises back above $71,500, it would suggest the recent recovery may continue.

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2026-03-27 09:24