Bitcoin (BTC) Price Analysis: Are Local Lows Behind Us?

It faced rejections from its short-term highs of $58.8K twice in two days. After losing the psychological support of $60K last week, the sentiment across the market was fearful.

Bitcoin [BTC] faced rejections from its short-term highs of $58.8K twice in two days. After losing the psychological support of $60K last week, the sentiment across the market was fearful.

There is some hope for a recovery, though. At the Xpress time of writing, the increasing accumulation trend suggested that buyers were willing, but other metrics suggested more pain is likely.

Xcryptographer Axel Adler drew attention to the current average losses for short-term holders (STHs). While the losses matched those of June 2023, they were much smaller in magnitude than the pain we saw in 2021 or 2022.

While it indicated a potential local bottom, it also showed that traders and investors should prepare for the worst-case scenario of a sharp price drop on the charts.

Evidence that Bitcoin’s local lows are behind us, source: Axel Adler on X

CryptoQuant noted that the trader realized a profit/loss margin of -17%. This was in the same ballpark as the market bottomed out over the past two years, reinforcing the idea that BTC is more likely to rally higher than lower.

source: Ki Young Joo on X

According to the founder and CEO of CryptoQuant, Ki Young Joo, Whales tend to use leverage at cyclical bottoms, making markets over-leveraged and forcing another price drop.

At the Xpress time of writing, whales were not overly leveraged, which could have paved the way for a deeper correction below the $50,000 level.

Traders feel humbled after trying to catch the breakout and ATH

source: Cryptoquant

From the last week of May to July 3, the estimated leverage ratio on exchanges rose rapidly. During that period, the price of Bitcoin was between $67,000 and $69,000. As the price fell below $66,000, the leverage ratio rose again, indicating that traders were trying to time their exit from greed.

Over the past week, their hopes have been dampened by Bitcoin’s continued decline. The leverage ratio has also decreased, which could be healthy for the market.

Overall, it is difficult to say with certainty that Bitcoin has formed a bottom. Several bottom signals were blinking and seller pressure may start to ease. However, investors should still have a plan of action in case the price drops below $50,000.