Bitcoin Must Defend $58K as Analysts Warn of Major BTC Price Correction

Analysts have warned of a major Bitcoin price correction should the premier asset fail to hold above the ultimate support level of $56,000.

Bitcoin price analysis reveals a crucial support level at $56,000, as stated by on-chain data analysis firm CryptoQuant.

Bitcoin’s Greatest Support Level Is $56K — CryptoQuant

Bitcoin has hovered around the $60,000 region for the past few days after dropping to $58,601 on Monday. The highest point BTC reached since the dip was $62,293 before settling around the $61,000 region.

While this stability has allowed altcoins like Solana to see minor price recoveries, prominent market watchers believe the danger is not over yet.

According to a recent analysis by CryptoQuant, Bitcoin’s greatest support level is $56,000. This means that any significant bearish volatility can only be defended at this price point. CryptoQuant stressed that failure to defend this threshold could trigger another major price correction.

The ultimate support level for #Bitcoin is $56K; falling below this could lead to a major correction. pic.twitter.com/ZD9xDN6wAm

— CryptoQuant.com (@cryptoquant_com) June 28, 2024

Bitcoin Could Crash Further To $54K – Analyst

In a separate breakdown, analyst Willy Woo attributed Bitcoin’s recent retest of the $58,000 threshold to excessive leveraged positions that needed to be purged and a selling spree by miners.

According to Woo, speculators have resumed increasing their positions. He noted that the market is not yet prepared for an uptrend without a notable drop in such contracts. As a result, the analyst consented Bitcoin could further crash to $54,000.

Spec chain analysis: recent price action has been interesting. A retest of the 0.58 floor, a level that was last touched during the miner selling spree and speculator leverage mania.

Speculator leverage has not fully purged yet, and demand is still weak. Floor could easily crack.

Price dropping to 0.54 levels would fully flush out the speculator cohort, setting up a strong floor for demand to return and begin the next wave up. Really depends on the strength of demand at these lower levels, but I’m not surprised if the floor cracks and we get one last drop before the next bull wave begins forming.

This is also supported by on-chain analysis, which shows that Bitcoin’s permanent holders are still accumulating at a rate of 72,000 BTC per month, which is down from 160,000 BTC per month in Q1 2024. However, this accumulation rate is still higher than the 68,000 BTC per month in May.

Demand From Permanent Holders Slowing Down

This demand from permanent holders has been a key driver of Bitcoin’s price rally to record highs in Q1. As a result, CryptoQuant argues that the market needs higher BTC demand from permanent holders to witness an upsurge.

Furthermore, the report reveals that U.S. investors’ demand for Bitcoin has recently dropped into negative territory. Historically, growth in U.S. investor demand has coincided with Bitcoin’s uptrend.

Additionally, stablecoin liquidity is slowing down, with the 60-day growth in the USDT market cap slowing from $12.6 billion in late April to $2.5 billion in June. CryptoQuant notes that this is the slowest pace since the last quarter of 2023. The firm adds that faster liquidity growth from stablecoins is needed for prices to rally.