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Bitcoin Below $60K Could Trigger ‘Panic’ Selling, Says Crypto Analyst | Currency News | Financial and business news
- Since March, the market has been in the $60,000 to $70,000 range, with the halving event in April not providing the expected boost due to a general lack of market catalysts, a trader said.
- One firm said 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 long- and short-term holders made profits, there was a shift towards selling, leading to significant declines over the next four to six months. The current cycle could follow a similar pattern if institutional demand and macroeconomic conditions weaken.
Bitcoin {{BTC}} could see a panic sell-off if it closes below the $60,000 level in the coming days, according to FxPro trader Alex Kuptsikevich. Crypto traders are targeting a break above $65,000 before sentiment can be considered bullish.
BTC briefly jumped above $63,000 in European morning hours on Monday, rattling alternative and mainstream tokens. Ether (ETH), Solana’s SOL, and dogecoin (DOGE) are up 3% in the last 24 hours, with most of the gains coming after BTC’s rally.
TON, the Tonchain blockchain token closely related to the Telegram messaging service, rose 7%, leading the jump among the majors.
O CoinDesk20 (CD20)a net broad index of the largest tokens minus stablecoins, rose 2.24%.
BTC has largely remained in the $60,000 to $70,000 range since March, with the much-anticipated halving event in April turning out to be a news selling play amid a general lack of market catalysts. Inflows into exchange-traded funds (ETFs) have declined in recent weeks, it has been reported, adding to bearish sentiment.
Alex Kuptsikevich said in a Monday note to CoinDesk that price action was characterized by a sequence of lower lows and lower highs, marking a sign that investors are selling hard on price rallies.
“There is likely pressure related to asset sales by miners and fears of tighter regulation of cryptocurrencies,” said Kuptsikevich, referring to the drop in mining difficulty following the April halving.
“A failure below $60,000 could trigger something of a panic sell-off. The positive scenario, in our opinion, will become the main one with a rise above $65 thousand, fixing the price at the 50-day moving average and in the reversal area at the beginning of May”, he added.
Mining difficulty measures how difficult it is for miners to solve mathematical puzzles that accept and confirm transactions on a proof-of-work blockchain. The increase in resources needed to solve these puzzles puts a strain on miners’ businesses, making them unprofitable and resulting in fewer miners.
Short-term holders can influence withdrawals
Elsewhere, analysts at crypto investment firm Ryze Labs said in a weekly note that the behavior of short-term bitcoin holders – or those who hold the tokens for less than 155 days – could broadly influence markets in the coming months.
Ryze Labs said there have been three instances where 94% of long-term and short-term Bitcoin holders made a profit: from mid-November 2017 to mid-April 2017, from mid-February to mid-April 2021, and most recently , from the end of February 2024 to the beginning of April.
The maximum 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 short-term, which held it for less than 155 days.
However, after these spikes, short-term holders’ losses increased rapidly, leading to a cycle reversal in which short-term sellers sold to long-term holders. The team noted that this change has historically resulted in significant reductions in the price of bitcoin over the following four to six months.
“In the most recent cycle, short-term holders had Bitcoin valued at $218.9 billion. Although most initially made a profit, they began actively selling. About a month after this period, the maximum price reduction in relation to the maximum of the period is approximately -6%”, stated the analysts.
“The current cycle may differ from previous ones due to institutional demand supported by improving macroeconomic conditions. However, if these supporting factors weaken, a decline in the price of Bitcoin similar to previous cycles could occur,” they added.
This story originally appeared on Coindesk