Key Takeaways
What’s Driving Bitcoin’s Recent Drop?
Heavy selling by long-term and short-term holders, with LTHs delivering 350,000 BTC in 30 days.
Does Bitcoin Still Have Rebound Potential?
Yes, the RSI is almost oversold, but high bond yields could limit a sustainable recovery.
Bitcoin [BTC] has suffered one of the steepest declines, falling below its annual opening of $93,576 in the past 48 hours.
Recent price action on the daily chart shows that the market is still in a cautious state. AMBCrypto has identified the most important factors to keep an eye on.
Sustaining profits amidst fear
The recent downward pressure on Bitcoin has largely been caused by large holders. These wallets, known for holding Bitcoin for over six months without spending any money, have now hit the market.
Data from CryptoQuant shows that this group has sold 350,000 BTC over the past 30 days, worth $33.49 billion at the time of writing, with an average gain of 173%.
Nevertheless, market liquidity has allowed a significant portion of these coins to be absorbed, especially by short-term investors.
Source: CryptoQuant
However, STHs are now under pressure. The group, known for holding Bitcoin for shorter periods of time, has plunged into losses.
The losses stem from forced sales below the average entry price of $110,500, which represents a loss of 7%.
For context, Bitcoin STHs sold 65,000 BTC worth $6 billion on November 15 – the highest level of the month.
Hope for recovery?
Market analyzes show that a recovery remains possible.
According to chart analysis, the Relative Strength Index (RSI) shows that Bitcoin is approaching oversold territory, a region that has historically supported repeated recoveries.
Source: TradingView
Pseudonymous crypto analyst Dark Fost noted in his chart updates that the trend for a recovery remains high – unless broader conditions worsen.
“Given the widening spread between EMAs and the stretched RSI, a technical recovery is likely soon. If conditions deteriorate, these rebounds should be viewed as exit opportunities.”
Macro sentiment still plays a role in any potential recovery, especially bond yields. A favorable environment generally requires both lower interest rates and lower bond yields.
Interest rates are currently on a downward trend, but returns remain high. Until both metrics improve, Bitcoin may not feel the full macro impact.
Source: CryptoQuant
The bear market could be minimal
According to Dark Fost, even if Bitcoin fails to recover and enters a bearish phase, the decline could be short-lived.
His view is based on comparisons with previous market cycles and leverage trends.
Compared to the past five cycles, Bitcoin’s current correction is the most minimal – down 28%, versus 2020’s 60% decline – despite its high debt burden.
Source: CryptoQuant
For context, for every $1 wagered in the spot market, roughly $4 has been wagered in futures, masking the magnitude of the actual downside.
He added a caveat: Volatility continues to cool, especially after the historic $19 billion liquidation on Oct. 10.
“Over time, volatility continues to decrease as market capitalization grows, which makes perfect sense. BTC’s volatility recently reached the lowest level in its entire history.”
This suggests that Bitcoin’s ongoing correction is likely to be limited as the market matures.