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Bitcoin Crashes Below $55,000, But Traders Aren’t Afraid. Why?
As Bitcoin faces strong headwinds, breaching two critical support levels at $60,000 and $56,500 in quick succession, it may, on the surface, appear that fear is gripping the market. There are reasons to be fearful, especially for coin holders leveraging BTC in decentralized finance (DeFi) protocols, looking to borrow against the asset as collateral.
Fear Has Not Yet Gripped the Bitcoin Market
Even as prices plummet, an on-chain analyst, taking into account X, he claims that the market is relatively composed and that fear and panic have not yet fully taken hold of it. Pointing to the Bitcoin Daily Realized Profit Loss report, the analyst said that unless there is an increase in the number of addresses in the red, indicating panic selling, the market can withstand further losses.
The analyst’s assessment is that the lack of “panic sell” bars suggests that investors are still processing current events. Even if prices fall below $56,500, the market, the analyst added, can go as low as $47,000, a level that “doesn’t look as bad as three weeks ago when we were at 70,000.”
However, amidst this necessary correction, the analyst added that the shakeout should be slower. This way, there will be a more orderly market correction.
As of July 5, Bitcoin is down nearly 30% from its all-time highs and is under enormous selling pressure. After the dip below $56,500 today, it is evident that the coin is now in a bearish breakout formation. The sell-off has forced the prices out of the March-May 2024 range. This signals a new phase after the expansions in Q1 2024, when the coin rose to $73,800.
Analysts are predicting further losses with sellers in the driver’s seat and Bitcoin in a bearish breakout formation. So far, immediate support is at $50,000 and $45,000, marking the January 2024 highs.
Best Time to Buy Bitcoin? Wait for this Signal
While the decline is forcing investors to seek refuge in stablecoins, another analyst thinks this could be the best time to grab more BTC at a discount. Turning to X, the analyst underlined several fundamental factors that paint a long-term bullish picture.
Related readings: This dormant Bitcoin wallet containing $6.8 million in BTC was just reactivated. Are they selling it?
Some of these favorable factors include the availability of spot Bitcoin exchange-traded funds (ETFs). There is also regulatory clarity in the United States ahead of the hotly contested presidential election. At the same time, the analyst believes that the upcoming $16 billion payment from FTX trustees would be a net positive for optimistic BTC bulls.
However, before there is stability and this week’s sell-off is countered, there must be a slight increase in new addresses. Once observed, it would mean that new investors are coming in, creating demand for the coin. For now, prices are falling and fewer addresses are being created.
Feature image from DALLE, chart from TradingView