An expert from CryptoQuant has pointed out that Bitcoin (BTC) may experience a more significant drop in price despite the upcoming halving event.
Based on an analysis by Gaah’s Quicktake on the cryptocurrency platform, the market remains volatile with potential danger for leveraged investors. A significant shift in market conditions may lead to a correction and disrupt Bitcoin‘s existing pricing pattern.
BTC Faces Correction Risk
Currently, the number of open contracts for Bitcoin is roughly average, indicating that investors hold a fairly balanced attitude towards acquiring more positions. However, Bitcoin’s price continues to stay close to its previous peak levels reached in March.
In simpler terms, the unstable upper part of the open interest range implies that there’s potential for more sell orders from highly leveraged traders, increasing the risk for traders in this area. Gaah cautions against trading in this volatile region, as even minor price pressures could trigger a correction and cause Bitcoin to drop before reaching a new record high.
“For leveraged traders, this price level comes with significant risk. If market pressure intensifies, it could lead to a more substantial drop and disrupt the current price trend. This would shift Open Interest towards the lower threshold, which is considered an area of extreme fear as indicated by the red zone on the chart.”
A Euphoric Market Sentiment
Additionally, the Bitcoin futures market reveals an exuberant investor mood with elevated funding rates. Such levels suggest excessive enthusiasm and increase the likelihood of a significant price drop.
Gaah’s assessment is offered as Bitcoin bounces back from a three-week slump. The digital currency dropped from its peak of $73,700 hit on March 14 to under $62,000. Recently, the currency rebounded and hovered around $70,000. Yet, it took a dip in the past few hours, dropping to $69,300 as per CoinMarketCap’s data.
Recently, CryptoQuant revealed that strong demand from big Bitcoin investors is likely causing the asset’s rise following the halving. The impact of the halving event on Bitcoin has lessened over the past few days.
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2024-04-12 19:26