As Bitcoin continues to face challenges, breaching key support levels at $60,000 and $56,500 in rapid succession, there is a sense of fear looming over the market, particularly for coin holders utilizing BTC in decentralized finance (DeFi) protocols to secure loans.
Despite the price plummet, an on-chain analyst maintains that the market remains relatively stable, with fear and panic not yet gripping investors entirely. By analyzing the Bitcoin Daily Realized Profit Loss ratio, the analyst suggests that unless there is a surge in addresses displaying losses, indicating panic selling, the market can endure further declines.
The absence of significant “panic selling” signals implies that investors are still digesting the current situation. Even as prices dip below $56,500, the market could potentially drop to $47,000 without appearing as dire as it did three weeks ago when prices were soaring at $70,000.
However, amidst this necessary market correction, it is imperative for the shakeout to occur gradually to ensure a more orderly adjustment. As of July 5, Bitcoin has plunged nearly 30% from its all-time highs and is facing intense selling pressure, entering a bear breakout phase following the drop below $56,500.
Analysts anticipate further losses as sellers dominate the market, with immediate support levels at $50,000 and $45,000 representing highs from January 2024.
While investors flock to stablecoins during the market downturn, another analyst believes that this could present an opportunity to acquire more BTC at a discounted rate. Highlighting various fundamental factors, such as the emergence of spot Bitcoin exchange-traded funds (ETFs) and regulatory clarity in the U.S., the analyst envisions a bullish long-term outlook.
Additionally, the forthcoming $16 billion payout by FTX trustees is expected to benefit optimistic BTC bulls. However, for stability to return and counteract this week’s sell-off, an increase in new addresses is necessary. This uptick would indicate a influx of new investors, driving demand for the coin.
As the market dynamics shift and Bitcoin faces downward pressure, both caution and strategic positioning are vital for investors seeking to navigate the turbulent waters of the crypto industry.
