Bitcoin Faces Potential Further Decline as Bear Market Takes Hold
Bitcoin has entered a bear market, trading down over 20% from its January peak. Traders are bracing for a potential drop to $70,000, as demand for put options increases. Analyst insights indicate key support levels are critical, and market dynamics remain shaky amid recent hacks and investor sentiment.
Bitcoin traders are currently monitoring the potential for a significant market downturn, following the leading cryptocurrency’s entry into a bear market this week. After dropping more than 20% from its peak earlier this year, Bitcoin has prompted traders to position for further declines, particularly with some options indicating a possible drop to $70,000 by this Friday.
According to data from Deribit referenced by Bloomberg, demand for put options with a $70,000 strike price has surged, becoming the second-highest among all options due to impending expiration. An additional fall to this level would represent an 18% decline from current prices and a total decrease of 35% from Bitcoin’s highest price of over $109,000 recorded in January.
Katie Stockton, a prominent analyst and founder of Fairlead Strategists, remarked, “Bitcoin has confirmed a short-term breakdown within the context of its long-term uptrend. We would not rule out a test of secondary support near $73.8K before the corrective phase fully matures.”
Moreover, George Pavel, General Manager at the trading platform NAGA, indicated that Bitcoin has significant potential to decrease further to $70,000 if it fails to hold key support levels around $82,000. The cryptocurrency is currently trading near $85,821 and has recently experienced a significant decline of approximately 21% from its all-time high of $109,350.
The overall market capitalization for Bitcoin has diminished to $1.7 trillion, with a notable increase in trading volume by 27% over the past 24 hours, as reported by CoinMarketCap. This sell-off in Bitcoin has been exacerbated by a general risk-off sentiment in global markets and compounded by external factors hampering investor confidence.
Significant outflows exceeding $1.1 billion from spot Bitcoin exchange-traded funds (ETFs) were observed on Tuesday, indicative of declining investor interest. Furthermore, recent hacking incidents resulting in the theft of $1.5 billion from the crypto exchange ByBit have contributed to increased volatility and market instability, marking it as one of the largest hacks in cryptocurrency history.
Mr. Pavel noted that continued macroeconomic uncertainty and delays in favorable cryptocurrency legislation during the Trump administration may contribute to the ongoing selling pressure. He cautioned, “Unless there is a significant shift in market dynamics, the rout could extend for some time.”
In summary, Bitcoin is currently facing significant pressure as it has slipped into a bear market, with traders anticipating further declines. Key indicators suggest that the cryptocurrency could drop to around $70,000, prompting notable interest in put options. The market dynamics continue to be influenced by external factors, investor sentiment, and recent large-scale hacks. Without a substantial shift in confidence, the sell-off may persist.
Original Source: www.businessinsider.com
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