- The rising leverage ratio and open interest could hold Bitcoin back.
- The pitch fork and failure of the 200 DMA support pointed to a price drop below $60,000.
Bitcoin [BTC] has fallen below the 200-day simple moving average. It is currently trading within the $60k-$60.5k support zone, but has a good chance of falling to $56k and possibly lower.
CoinMarketCap showed that the Crypto Fear and Greed index was at 48. Bearish sentiment gripped the market and traders might be tempted to trade on margin to reverse losses, which could backfire spectacularly.
Is Bitcoin Bottom Near?
Crypto analyst Axel Adler pointed out that price declines since 2023 fell from 17% to 23% in May. The current figure was 16.4%. Compared to the past twelve months, the bottom seemed close.
Source: BTC/USDT on TradingView
The Fibonacci retracement level is at the $56k level, which has already been tested as support in early July. The bulls’ failure to defend the 200-day moving average was a strong bearish sign.
Furthermore, the pitchfork in the chart above showed that the $61.3k level was a confluence of 200DMA and the pitchfork support, further exacerbating its failure. significant.
Was the derivatives market too heated?
Since March, the $70k level, which is also close to all-time highs, has not been convincingly defeated. During this period, Open Interest fluctuated between $30 billion and $35 billion.
Over the past week, the stock has fallen $4 billion due to bearish short-term sentiment.
A good bull run requires high demand in the spot market, and when the futures market gets too heated, the overzealous bulls and bears generally experience pain from price volatility, which can reset the upward trajectory.
The estimated leverage ratio has increased since June. An increase in this measure indicates that investors are taking greater risks when trading with leverage. This could be due to hopes for a bullish breakout.
Read Bitcoin’s [BTC] Price forecast 2024-25
This could negatively impact the chances of a breakout as price is attracted to the long liquidation levels in the south.
An earlier report noted that selling pressure from long-term holders has eased in recent weeks. This meant that the $60k may have been the local low, but a deeper retracement due to the macroeconomic events and market-wide panic cannot be ruled out.