If you are wondering why Bitcoin is not extending its rally despite expectations of $70k+ prices, here are some answers.
- After a euphoric rise last week, Bitcoin has fallen, influenced by negative news. Bitcoin’s longs started getting liquidated, which could be another troubling sign for the king coin.
Last week, Bitcoin’s [BTC] excitement soared to almost euphoric levels. Granted, there was a lot of hype around it, particularly due to the Bitcoin 2024 conference.
In contrast, the market has adopted a slower pace this week, which is also evident in BTC’s price action.
Just as Bitcoin’s rally was driven by overall positive news, the cryptocurrency’s performance this week has been influenced by negative news.
This fed into Bitcoin’s bipolar mood, as evidenced by its price action, which dipped almost 6% to its $66,042 press time levels.
Source: TradingView
BTC bounced back by roughly 30% from its July lows. Short-term traders that bought into the dip may thus have an incentive to sell, contributing to the ongoing retracement.
But how long can this trend last?
AMBcrypto’s analysis using the Fibonacci retracement revealed that the next pivot could come between $61.921 and $59,693. That is, if the sell pressure continues.
Bitcoin goes on a hype recess
There was a lot of politically charged speculation last week, but now the hype has died down. Instead, the market seemed to be taking a cautious stand this week owing to the FOMC data and the FED’s upcoming meeting.
Uncertainty around economic announcements tends to influence investment decisions. Therefore, many traders tend to exit their position and wait for clearer skies before making the next move.
This may explain the profit-taking.
The subsequent sell pressure as a result of a cautious stance may have been amplified by new Mt. Gox data. According to Lookonchain, Bitcoin transferred 47,229 BTC to anonymous wallets in the last 24 hours.
This development further sparked more sell pressure concerns in the market. If the moved BTC were to be dumped into the market, it would trigger roughly $3.8 billion worth of sell pressure.
Longs liquidated?
Bitcoin long positions may have contributed to the quick pullback this week. AMBCrypto’s longs heatmap assessment revealed that there were two major zones.
The first was at the $68,875 and $68,901 price levels, where BTC longs soared to $101.8 million. The second major zone was between $69,472 and $69,500.
Source: Hyblock Capital
BTC dipped quickly below the two leveraged long positions, which may have provided more downside liquidity for short sellers.
Will Bitcoin dip much lower? This remains to be seen, especially because market dynamics can change any time. Nevertheless, Bitcoin reserves Just concluded July at their lowest levels since 2018.
Source: CryptoQuant
The exchange reserve metric confirmed that roughly 2.6 million BTC remained on exchanges at press time.
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