DeFi
Bitcoin crashed below $55,000, but traders are not afraid, why?
As Bitcoin faces strong headwinds, breaking through two critical support levels at $60,000 and $56,500 in quick succession, it may seem, at first glance, that fear is gripping the market. There is reason to be fearful, especially for coin holders who are mining BTC in decentralized finance (DeFi) protocols and looking to take out loans using the asset as collateral.
Fear Has Not Yet Invaded the Bitcoin Market
Even if prices fall, a chain analyst, taking X, supports The market is relatively calm and fear and panic have not yet completely taken over it. Referring to the daily profit-loss ratio on Bitcoin, the analyst said that unless there is an increase in the number of addresses in red, indicating panic selling, the market can withstand more losses.
The lack of “panic selling,” the analyst said, suggests investors are still processing current events. Even if prices fall below $56,500, the market, the analyst added, could fall to $47,000, a level that “doesn’t look as bad as it did three weeks ago when we were at $70,000.”
However, in the midst of this necessary correction, the analyst added that the recovery movement should be slower. In this way, the market correction will be done in a more orderly manner.
On July 5, Bitcoin dropped nearly 30% from its all-time highs and is under immense selling pressure. After the drop below $56,500 earlier today, it is evident that the coin is now in a bearish breakout formation. The massive selloff has forced prices out of the March-May 2024 range. This signals a new phase after the expansions of Q1 2024, when the coin surged to $73,800.
Analysts expect more losses as sellers are in control and Bitcoin is in a bearish breakout pattern. So far, immediate support lies at $50,000 and $45,000, marking the January 2024 highs.
When is the best time to buy Bitcoin? Wait for this signal
As the drop forces investors to seek refuge in stablecoins, another analyst believes this could be the best time to buy more BTC at a discount. Speaking to X, the analyst underlines several fundamental factors that paint a bullish picture in the long term.
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Some of these favorable factors include the availability of Bitcoin spot 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 is confident that the upcoming $16 billion payout by 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 rise in new addresses. Once this phenomenon is observed, it would mean that new investors are flooding in, creating demand for the currency. For now, prices are falling and fewer and fewer addresses are being created.
Main image of DALLE, chart from TradingView