As an experienced analyst, I believe that the current price action of Bitcoin is cause for concern. The recent drop below its 200-day trendline and loss of key support levels have sparked fears of a potential extreme price crash, with some suggesting a decline to the $40,000 range.
The cost of Bitcoin, the leading digital currency, has dipped under its 200-day average following a decline below the $60,000 support and a drop above $57,000. This downturn has raised alarms among investors about a possible significant price decrease, potentially pushing the value of Bitcoin down to around $40,000.
Andrei Kang, a co-founder of Mechanism Capital, drew comparisons between the recent Bitcoin price movements and the events preceding the 2021 market collapse. He emphasized that the current period where Bitcoin has remained within its price range is longer than what was observed prior to the crash in 2021.
Additionally, Kang pointed out that more than $50 billion in cryptocurrency leveraged positions are nearing a record high. He also mentioned that many market players seem to be disregarding the potential consequences of a drop in Bitcoin’s price over the past 4 months.
Kang has updated his Bitcoin prediction, indicating a more significant drop than earlier estimated. He now forecasts that the cryptocurrency will reach around $40,000, which could negatively impact the market and possibly necessitate several months of volatility or downtrend before recovering.
Many market players fail to recognize the importance of a possible four-month price downturn in Bitcoin. This situation bears similarities to the May 2021 market, where a significant correction followed a dramatic rally in Bitcoin and other cryptocurrencies. Approximately $50 billion in crypto leverage is at risk here.
— Andrew Kang (@Rewkang) July 3, 2024
According to a report by CryptoGlobe, the head of research at FalconX, David Lawant, has proposed that Bitcoin’s price may experience a significant surge due to the current undervaluation indicated by the Bitcoin premium on Coinbase, which historically has been a reliable indicator.
Lawant pointed out that the last instance of such a large negative Bitcoin premium on Coinbase occurred in October 2023, with Bitcoin priced around $27,000. This event preceded the cryptocurrency’s bullish surge to a record-breaking price above $73,500.
In his recent post, Lawant highlighted the past importance of the indicator and suggested a possible upward trend for Bitcoin (BTC) following its correction from approximately $73,000 to around $60,000 at the moment of writing.
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2024-07-04 17:54