Assessing the Potential Drop in Bitcoin Prices

Bitcoin has faced rejection around the $70,000 mark, prompting discussions on possible support levels where a downward trend might stabilize.

At present, Bitcoin’s trajectory appears to be moving sideways. The daily chart has highlighted a third occurrence of lower highs since March, which indicates several significant support levels that could facilitate a rebound.

Concerns Arising from Decreasing Highs

The observed lower highs in April and June 2024 have previously triggered corrections of 23% and 26%, deepening concerns in the market.

The retail market for Bitcoin is largely inactive, with a notable decline in 7-day average spot trading volumes plummeting from $29 billion to $11 billion, a decrease of 62% over the past four months.

Conversely, Bitcoin futures and perpetual contracts are nearing all-time highs and maintaining a favorable funding rate, signifying that long positions are compensating short traders.

Should leveraged long positions fail to uphold the $66,000 threshold, and if open interest sees a substantial decline, it could signify an exit of longs, leading to further drops in Bitcoin’s value.

Critical Price Support at $63,000

Currently, Bitcoin may face a retest of the initial support zone between $64,500 and $63,000, aligning with the 50 and 100-day exponential moving averages (50, 100 EMA).

This support level was previously engaged during a corrective phase on July 25, and there exists a potential liquidation event of approximately $1 billion across exchanges like Binance. This could serve as a defense for this support level as traders aim to execute orders within a liquidity range. Nevertheless, if the price dips below $63,500, it may lead to an additional downward trend.

The area ranging between $61,400 and $62,300 represents an untouched daily order block. Though it lacks historical volume significance, a price rebound in this zone seems unlikely.

Long-Term Support Observations

Bitcoin’s long-term stronghold lies within the $60,000 to $56,000 range, which boasts a critical concentration of holdings. Data from Intotheblock shows that over 6 million addresses collectively hold more than 2.42 million BTC, averaging a purchase price of $56,083.

This support area also represents a historical lower-low zone, raising concerns about a possible liquidity sweep if Bitcoin’s price continues to decline. In extreme correction scenarios, it is essential for Bitcoin to maintain above the $60,000 level due to its past relevance.

A prominent crypto analyst noted that while Bitcoin is currently stabilizing, vigilance is necessary regarding the $60,000 support area. He remarked that the Daily MA128 (65.2K) functions as key support, indicating that if it fails to hold, a revisit to the $60,000 support level could occur.