In the last 24 hours Bitcoin [BTC] saw $415.83 million worth of derivatives traders liquidated, while $319.18 million worth of these positions were long. In recent trading hours, the leading crypto retested the low of $59.1k, threatening another bearish collapse.
Since May 6, the Coinbase Premium Index for Bitcoin has been negative. The metric tracks the price difference of the asset between Coinbase (USD pair) and Binance (USDT pair).
The low premium levels implied reduced enthusiasm among US investors compared to the global market. Furthermore, AMBCrypto’s previously reported liquidation heatmap data indicated why BTC prices could dive towards the $57k area in the coming days.
Price weakness versus decreasing selling pressure in the spot market
The 4-hour chart showed a bearish swing structure. The drop from $74.5k to $59.1k was used to chart a series of Fibonacci retracement levels (yellow). The 50% level at $66.8k rejected the bullish progress.
The longer-term structure, combined with this rejection, meant that a price drop to $55.5k and possibly even $49.6k could begin in the coming weeks.
The Hidden Danger for the Next Bitcoin Market Phase
Glassnode’s weekly market report noted that spot markets led the sell-off. Derivatives markets reacted to the move rather than fueling it, which could help push market lows in the coming months.
Some long-term investors began to view current prices as attractive buying levels. However, according to the analysis platform, there has not yet been a market-wide accumulation.
There is a threat that could catalyze the bottom of the market.
Crypto analyst Axel Adler Jr. drew attention to Bitcoin and the Strategy [MSTR] the decline in shares. They were down 51% and 78% respectively from their highs, marking heavy losses.
Still, it was still nowhere near the bottom values of 2022, when the decline reached -77% and -89% respectively.
If the company is forced into a position where it has to sell spot Bitcoin to pay preferred dividends and the company’s interest on debt, it could be bad news for the broader crypto market.
While the company’s debt poses no margin call risk, the spot selling could send already fearful market sentiment into widespread panic.
Such an outcome could hasten or even mark the cycle’s final capitulation before an eventual recovery.
Final summary
- The Bitcoin Coinbase Premium Index has been negative for more than six weeks, indicating weak interest from US investors.
- In the short term, another price drop below $59,000 seemed likely as derivatives markets catch up to the spot-driven move.