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 has continued to hover around the $60K region for the past few days following Monday’s price drop to $58,601. The highest point BTC reached since this dip was $62,293 before settling around the $61K region.
While this stability has allowed altcoins like Solana to see minor price recoveries, prominent market watchers believe the danger is not over
Bitcoin Must Defend $58K
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
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.
Factors Needed for Market-wide Surge
Regardless of the bearish projections, CryptoQuant stressed that the market is still in a bullish phase, albeit the weakest since March 2023. A key factor influencing this bullish argument is the demand for Bitcoin.
Currently, the demand for BTC from permanent holders is growing at a monthly rate of 72,000 Bitcoin, a significant improvement from 68,000 BTC in May. However, the rate is slower than the 160,000 monthly BTC demand in Q1 2024.
This significant demand triggered a price rally to Bitcoin’s record high in Q1. As a result, CryptoQuant argued that the market needs higher BTC demand from permanent holders to witness an upsurge.
Furthermore, the report revealed that U.S. investor demand for Bitcoin has recently dropped to negative territory. Historically, growth in U.S. investor demand coincides 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 emphasized that this is the slowest pace since the last quarter of 2023. The firm noted that faster liquidity growth from stablecoins is needed for prices to rally.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
