Bitcoin is currently going through a period of consolidation, struggling to make significant gains as seen in the daily chart’s price action. Despite avoiding lower prices, the coin has not fully reversed the losses experienced on June 24.
An analyst on X has expressed concerns about potential further losses in the coming days. The analyst highlighted a troubling trend where sellers are consistently adding more short orders, even amidst optimism within the Bitcoin trading community.
The Bitcoin Net Taker Oscillator indicator shows a reading of -1.5%, a level previously observed before prices surged to $70,000 in November 2021 and then sharply declined in 2022. Currently, Bitcoin is trending near an all-time high, approximately 20% below the peak of $73,800 reached in mid-March 2024. The current price formation is being defined by an uptrend from Q1 2024, with key support levels being tested between $56,500 and $60,000.
If the analyst’s projections materialize, Bitcoin could potentially drop to $50,000, which would challenge the short-squeeze narrative held by some. Furthermore, there has been an increase in long liquidations, reaching 13% as of June 27, indicating that leveraged traders on major exchanges like Binance and OKX are exiting positions at a loss.
The analyst drew parallels between the current liquidation events and those during the 2019-2020 correction when a significant number of long traders were liquidated, leading to a 46% decrease in Bitcoin’s price within five months. The analyst suggests that a similar scenario could unfold in the coming months, but also notes that if whales purchase over 500,000 BTC, prices could stabilize and rise.
Bearish sentiment is also evident in Santiment data, showing a decline in the number of users and traders expecting Bitcoin to increase in value across various social media platforms. This sentiment has been growing since the Bitcoin halving event and the subsequent sideways movement in prices since April 2024. Despite this, some traders view the current bearish sentiment as a contrarian indicator, especially given the ongoing support above $60,000.
Declining trader and investor confidence can often signal market bottoms, presenting an opportunity for aggressive traders to consider buying Bitcoin at what they perceive as undervalued levels. While the overall sentiment may be bearish, the resilience of the bulls is notable, with prices consistently rejecting attempts to push lower.
In conclusion, while the market sentiment may be leaning towards a bearish outlook for Bitcoin, there are contrasting views that suggest a potential turnaround in the near future. As the market continues to evolve, it is essential for traders and investors to conduct thorough research and analysis before making any investment decisions.