Bitcoin Below $60K Could Trigger ‘Panic’ Selling, Crypto Analyst Says

The CoinDesk 20 Index, which includes the largest non-stablecoin tokens and is known for its liquidity, experienced a 2.24% price increase.

As a researcher studying the Bitcoin market, I’ve observed that its price has mostly stayed within the range of $60,000 to $70,000 since March. The much-awaited halving event in April didn’t result in the significant price increase many had expected, instead leading to a sell-off as market catalysts remained scarce. Moreover, recent inflows into Bitcoin Exchange-Traded Funds (ETFs) have noticeably decreased, which could be contributing to a bearish outlook on the cryptocurrency.

In a note to CoinDesk on Monday, Alex Kuptsikevich expressed that the market’s price behavior has featured successive lower peaks and troughs. This pattern signifies that investors have been offloading assets during price surges.

As a researcher studying the cryptocurrency market, I’ve noticed that there have been recent pressures contributing to the price drop following April’s halving. These pressures can be attributed to miner sell-offs of their assets and growing concerns about potential regulatory tightening in the industry.

As a researcher studying the market trends, I would interpret the current situation as follows: A decline below the $60,000 mark could potentially lead to a wave of selling pressure. Conversely, if the price surpasses the $65,000 threshold, our expectation is that this bullish trend will gain momentum, pushing the price upwards towards the 50-day moving average and the potential reversal point around early May.

The measure of mining difficulty signifies the level of complexity involved in solving mathematical problems that validate and record transactions on a proof-of-work blockchain. As the intricacy of these problems grows, so do the resources required to tackle them, putting undue pressure on mining businesses and rendering them unprofitable. Consequently, fewer miners are enticed to join the network.

Short-term holders may influence drawdowns

In their latest report, cryptocurrency analysts at Ryze Labs pointed out that the actions of investors holding bitcoin for short periods, typically under 155 days, could significantly impact market trends over the next few months.

As a crypto investor, I’ve come across some interesting data from Ryze Labs. They mentioned that in three distinct periods, 94% of both long-term and short-term Bitcoin holders managed to make a profit. These periods were from mid-November 2017 to mid-April 2018, mid-February to mid-April 2021, and most recently, from the end of February 2024 to the beginning of April.

As a financial analyst, I’ve observed some intriguing trends in the Bitcoin market over the years. In particular, I’ve noticed that during specific periods, the amount of Bitcoin held by short-term investors reached remarkable peaks. These peaks occurred when the market valued their holdings at approximately $117.8 billion back in 2017 and a staggering $289.9 billion just recently in 2021.

As a researcher studying Bitcoin market trends, I’ve noticed an intriguing pattern: after the peaks, short-term investors tend to suffer substantial losses, causing them to sell to long-term holders. This trend has historically resulted in a cycle inversion. In other words, the roles of buyers and sellers switch places. The team and I have observed that this shift has typically been followed by bitcoin price drawdowns lasting between four to six months.

“During the latest market cycle, short-term investors placed a total value of $218.9 billion on Bitcoin. At first, many saw profits, but they soon began to offload their holdings. Approximately one month later, the price drop from the high point was around 6%.”

“The present Bitcoin market condition might vary from past experiences as a result of robust institutional demand fueled by enhanced macroeconomic situations. Nevertheless, if these favorable factors lose strength, we could witness a Bitcoin price correction akin to previous market cycles.”