- Bitcoin holders’ losing trends showed that bulls could be hopeful about a recovery
- If historical trends repeat themselves, an even deeper price correction could result
Bitcoin [BTC] has faced two rejections from the short-term range highs of $58.8k in two days. After losing the psychological $60k support last week, the market sentiment was fearful.
There is some hope for a recovery, however. At the time of writing, the rising accumulation trend score suggested buyers were prepared, but other metrics implied more pain could be coming.
Source: Axel Adler on X
In a post on X, crypto analyst Axel Adler drew attention to the current average losses of short-term holders (STHs). While the losses are in line with those of June 2023, the magnitude was much lower than the pain seen in 2021 or 2022.
While it was a signal that a local bottom could possibly be reached, it also showed that traders and investors should be prepared for the worst-case scenario, namely an even sharper price drop on the charts.
Indications that Bitcoin’s local lows are behind us
Source: CryptoQuant on X
CryptoQuant noted that the trader realized the profit/loss margin was -17%. This was in the same neighborhood as the market bottoms of the past two years, reinforcing the idea that Bitcoin is more likely to rebound higher than fall lower.
Source: Ki Young Ju on X
According to Ki Young Ju, founder and CEO of CryptoQuant, whales often use leverage at their cyclical lows, causing markets to become over-leveraged and causing prices to fall again.
At the time of writing, there was no evidence of whale over-indebtedness, which could have set the stage for a deeper correction below the $50,000 level.
Traders were humbled after trying to capture the breakout and ATH
Source: CryptoQuant
From the last week of May to July 3rd, the estimated leverage ratio on exchanges rose rapidly. During that time, the price of Bitcoin fluctuated around $67k-$69k. When the price dropped below $66k, the leverage ratio climbed again, indicating that traders were trying to time the bottom out of greed.
Their hopes were dashed this past week as BTC continued to fall. The leverage ratio also dropped, which could be healthy for the market.
Read Bitcoin’s [BTC] Price Prediction 2024-25
Overall, it’s hard to say with certainty that Bitcoin has bottomed.
Multiple bottom signals have been flashed and selling pressure may ease, but investors should still have a plan of action in case the price falls below $50k.