On July 4th, Bitcoin witnessed a drop exceeding 2%, marking the first significant retest of a crucial support line since October 2023. TradingView data revealed new local lows of $57,885 on centralized exchanges following the recent daily close. The lack of positive sentiment and persistent selling pressure in spot markets created challenging conditions for Bitcoin bulls.
What Is Happening on the Bitcoin Front?
According to CoinGlass, a blockchain data analysis platform, Bitcoin long liquidations in futures markets amounted to approximately $60 million within 24 hours. Popular trader Skew highlighted that the BTC/USD pair breached its 200-day moving average (MA) for the first time in ten months. He pointed out that the $63,800 spot selling has been the primary driver of this trend since its rejection and reversal, and market demand and signs of reversal are essential for the MA to act as a trigger for the market.
At the time of writing, the 200-day MA stood at $58,400, slightly below the spot price after a brief rise. The DecenTrader team indicated that if Bitcoin’s price declines further, a significant amount of long liquidations, ranging between $51,000 and $52,000, could be triggered.
Details on the Subject
Charles Edwards, founder of Capriole Investments, identified clear factors contributing to the negative trend. Data from Glassnode supported his argument that Bitcoin has faced substantial selling pressure throughout the year. Despite the launch of US spot Bitcoin exchange-traded funds in January, these negative effects could not be mitigated. Edwards stated that net inflows of $24 billion into the market in 2024 from key players like Michael Dell and ETF funds are mere noise.
Edwards further emphasized that ETF funds are not the sole demand in the current market landscape.
Key Insights for Traders
- Monitor Bitcoin’s 200-day moving average for potential market trend signals.
- Be aware of significant liquidation levels between $51,000 and $52,000, which could trigger further price declines.
- Recognize that substantial selling pressure persists, despite new market entrants like ETFs.
In conclusion, Bitcoin’s recent decline following the retest of a crucial support line, coupled with substantial selling pressure and significant long liquidation levels, presents a challenging environment for traders and investors. Careful monitoring of market indicators and factors influencing demand will be essential for navigating the volatility.