Bitcoin’s (BTC) price has barely recovered from the debacle of momentum witnessed over the last few days.
Nevertheless, the cryptocurrency appears to be under the threat of further drawdown due to not bearishness but bullishness of the investors.
Bitcoin Faces a Challenge
Bitcoin’s price fell from $62,000 to $53,300, shocking the crypto market and killing many bullish dreams. The futures market registered long liquidations amounting to $263 million in three days.
This is the second-highest liquidation in the last two weeks, with the previous high noted three months ago in April. Generally, such high liquidations tend to calm investors down and make them step back to let the market cool down.
Bitcoin Long Liquidations. Source: Coinglass
However, BTC holders do not seem to agree with this opinion. The drawdown is considered to be facing the impact of Federal Reserve Chair Jerome Powell’s bearish speech earlier this week. Thus, the investors expect a quick recovery and are prepared to profit from it.
Analyst Willy Woo highlighted this in his explanation of the difference between buying futures and buying spot. He denoted that the former results in a bearish environment and stated that this could cause further losses.
According to the Bitcoin Open Value Oscillator, about half a million long contracts are still open in the futures market. Should Bitcoin’s price fall further, these longs could be liquidated. This will result in an extended period of bearishness for BTC.
Bitcoin Open Value Oscillator. Source: Willy Woo
BTC Price Prediction: Validating the Pattern
Bitcoin’s price, trading at $56,961 at the time of writing, is stabilizing after nearly falling to $53,300 yesterday. The cryptocurrency has yet to fulfill the expected 17% drawdown arising from the double top formation from four months ago.
This prediction targets a drop to $50,900, which will lead to massive long liquidations, as mentioned above. Should BTC lose its support of $55,000, this would become more probable.
Bitcoin Price Analysis. Source: TradingView
On the other hand, if Bitcoin’s price manages to bounce back from $55,000 and flip $58,800 into support again, recovery could begin. This would enable a rise to $60,000 to invalidate the bearish thesis.