Bitcoin Below $60,000 Could Spark ‘Panic Selling,’ Crypto Analyst Says

• Since March, the market has remained within a range of $60,000 to $70,000, with April’s halving event not providing the expected boost due to a general lack of market catalysts, one trader said .

• One firm said that short-term bitcoin holders, who have historically influenced market trends, could play a significant role in the coming months.

• After periods in which 94% of both long-term and short-term holders were in profit, a shift towards selling occurred, leading to notable withdrawals over the next four to six months. The current cycle could follow a similar pattern if institutional demand and macroeconomic conditions weaken.

According to FxPro trader Alex Kuptsikevich, Bitcoin {{BTC}} could experience a panic sell-off if it closes below the $60,000 level in the coming days. Cryptocurrency traders are aiming to move above $65,000 before sentiment can be considered bullish.

BTC briefly jumped to above $63,000 in the European morning hours on Monday, rattling alternative and major tokens. Ether (ETH), Solana SOL, and dogecoin (DOGE) are up 3% over the past 24 hours, with most of the gains coming after BTC’s rise.

TON, the Tonchain blockchain token closely linked to the Telegram messaging service, rose 7%, leading the jump among the majors.

THE CoinDesk 20 (CD20)a broad liquid index that includes larger tokens minus stablecoins, rose 2.24%.

BTC has largely remained between $60,000 and $70,000 since March, with April’s highly anticipated halving event proving to be a selling play amid a general lack of market catalysts. As reported, inflows from Exchange Traded Funds (ETFs) have declined in recent weeks, fueling bearish sentiment.

Alex Kuptsikevich said in a Monday note to CoinDesk that the price action was characterized by a sequence of lower lows and lower highs, marking a sign of investors selling into strength on price rallies.

“There is probably pressure related to the sell-off of assets by miners and fears of tighter regulation of cryptocurrencies,” Kuptsikevich said, referring to the decline in mining difficulties after the April halving.

“A failure below $60,000 could trigger some sort of panic sell-off. The positive scenario, in our opinion, will become the main one with a rise above $65 thousand, setting the price at the 50-day moving average and the reversal area in early May,” she added.

Mining difficulty measures how difficult it is for miners to solve mathematical puzzles accepting and confirming transactions on a proof-of-work blockchain. The increase in resources needed to solve these puzzles puts a strain on miners’ operations, making them unprofitable and resulting in fewer miners.

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Short-term holders can affect withdrawals

Elsewhere, analysts at cryptocurrency investment firm Ryze Labs said in a weekly note that the behavior of short-term bitcoin holders, or those who have held the tokens for less than 155 days, could broadly influence markets in the coming months .

Ryze Labs said there were three instances where 94% of Bitcoin holders, both long-term and short-term, saw profits: from mid-November 2017 to mid-April 2017, from mid-February to mid-April 2021, and, most recently, from late February 2024 to early April.

Short- and long-term investor behavior has historically preceded market movements. (Ryze Labs)

The highest values ​​of Bitcoin held by short-term investors were $117.8 billion in 2017 and $289.9 billion in 2021. During these periods, long-term holders and miners sold Bitcoin to holders at short term, who detained him for less than 155 days.

However, following these spikes, losses from short-term holders increased rapidly, leading to a reversal of the cycle where short-term sellers sold to long-term holders. The team noted that this change has historically resulted in notable declines in the price of bitcoin over the next four to six months.

“In the most recent cycle, short-term holders had $218.9 billion worth of Bitcoin. Although initially most were in profit, they began to actively sell. About a month after this period, the maximum price decline from the period high is around -6%,” the analysts said.

“The current cycle may differ from previous ones due to institutional demand supported by improving macroeconomic conditions. However, if these support factors weaken, there could be a decline in the price of Bitcoin similar to past cycles,” they added.

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