Bitcoin Bears Stretched: Sell-Side Liquidity Drying Up, Will History Not Repeat This Time?
Bitcoin has been unforgiving this week, tumbling over the last two days and worryingly breaking below the all-important psychological $60,000 mark. By the close of July 4, BTC had dipped below $57,000, with some analysts worried that the coin would likely extend losses today and over the weekend, free-falling to $50,000.
The flash crash triggered a wave of liquidations of both long and short positions across perpetual platforms like Binance and OKX, running into hundreds of millions. While fear continues to grip the market, some analysts are upbeat, expecting a turning point in the coming sessions.
Bitcoin Bears Stretched: Is The Sell-Off Over?
Taking to X, one analyst said the sell-off in the last two trading days devoured a big chunk of available sell-side liquidity. From the trader’s assessment, what remains now is around $7 billion in short liquidations remaining at the $72,000 price point.
This means the drop on July 3 and 4 could have stretched bears. Accordingly, there is a high likelihood that prices will surprisingly recover in the next few trading days.
This preview isn’t out of the ordinary. On April 20, the Bitcoin network halved miner events, effectively forcing changes among mining firms.
However, BTC also became deflationary, making existing coins in circulation scarcer in light of the existing demand. For this reason, traders expect falling prices to purge out weak miners and strengthen the ecosystem but also reward aggressive buyers who load up on dips.
Thus far, sell-side liquidity is drying up, and weak miners are liquidating, exiting the scene. If history guides, BTC is likely to recover from spot rates.
Will History Support BTC Bulls?
Beyond the impact of Halving, another analyst also pointed to historical price action and where BTC finds itself at spot rates.
Taking to X, the analyst said BTC was down 21% from all-time highs as on July 4, with the correction lasting for 45 days. The current retracement is within the average -22% observed in the recent bull cycle, which lasted for around 42 days.
Additionally, LookIntoBitcoin data points to possible stability. According to the MVRV-Z chart, there is an active shifting from the “early bull cycle run-up area” to the “cool-off area.”
Historically, this “cool-off” period often precedes the establishment of new support levels.
Even so, it remains to be seen whether BTC will stabilize and recover, reversing this week’s losses.
For now, the coin is rapidly dropping as prices worryingly crash from the consolidation.
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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