Amid ongoing market strain, Bitcoin faced challenges as it slipped below the $58,000 threshold. Analysts are now forecasting a notable price correction ranging from 30% to 40% within the current market cycle. This anticipated decline might prompt the leading cryptocurrency to revisit values reminiscent of previous bullish periods, prompting apprehension and strategic planning among investors.
Bitcoin's Rough Patch: Analysts Warn of Potential Further Declines
Bitcoin's recent performance has been disappointing, with a 10% decline in the past week, edging its trading price close to $55,000. Analyst Scott Melker has noted that Bitcoin has breached crucial support levels, which are now acting as resistance, potentially leading to further downturns. He warned that without sustained support, Bitcoin could see a significant drop, with little barrier until approximately $52,000 on the charts.
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From a technical standpoint, the outlook remains grim. Melker highlighted that the Relative Strength Index (RSI), a key indicator of oversold conditions, has not reached such levels, suggesting a lack of strong buying interest and supporting the possibility of further price declines. This sentiment is reflected in broader price trends, with Bitcoin displaying lower highs and lower lows, indicative of ongoing bearish momentum.
Melker emphasized that the current downturn represents only a fraction of what could lie ahead, noting that the correction, at 23%, is relatively shallow for a bull market. He pointed out that previous bull market corrections have typically seen pullbacks of 30-40%, suggesting the potential for more significant declines in the current cycle.
Bitcoin's User Activity Declining, What Does It Mean for the Market?
Looking beyond the immediate price movements, broader market indicators paint a concerning picture. Data from blockchain analytics firm Santiment indicates a notable decline in Bitcoin's daily active addresses. These addresses have dropped from over 17 million in March to approximately 14.7 million as of May 1st, suggesting a decrease in user activity and interest.
Source: Santiment
The sentiment was further echoed by Social Dominance, which also exhibited a 20% decline. As Bitcoin's value dipped, it not only affected the aforementioned market metrics but also triggered widespread liquidations, impacting numerous traders.
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Source: Santiment
In the last 24 hours, Coinglass reported approximately 60,795 traders liquidated, totaling $205.12 million in liquidations. Concurrently, the underwhelming debut of newly listed spot ETFs in Hong Kong, as reported by AMBCrypto, exacerbated the situation.
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Source: Coinglass
These ETFs managed only $11 million in trading volume on their first day, a stark contrast to the higher figures achieved by U.S.-based spot ETFs at their January launch. Additionally, U.S. spot ETFs experienced significant outflows, with $161 million withdrawn on Tuesday alone, marking the fifth consecutive day of outflows, as analyzed by AMBCrypto using SoSo Value data.
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Moreover, the anticipation of the U.S. Federal Reserve maintaining steady interest rates in the upcoming FOMC meeting due to higher-than-expected inflation has led traders to withdraw from riskier investments, adding further pressure to an already strained market.
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