Bitcoin’s latest price drop after making a high at nearly $69k was quite significant. The low during the correction was formed at $56.5k, and that might have been the bottom. After this, we saw a price jump, but Bitcoin got rejected at $60k and treaded back to $57.5k. Even after that, we can expect that Bitcoin won’t break $56k, and it will be the bottom for this correction. The recent correction is almost 20%, which we have seen for significant BTC corrections on average.
Why could $56.5k have been the bottom?
Whenever the price of Bitcoin crashes fast, we see a domino effect which is triggered by collapsing stop losses and liquidations in the future market. But this time around, we didn’t see much of that happen. Yes, it was there, but the amount was surprisingly low as compared to what we would generally see in case of such a crash. There was a liquidation of around $600 million, which is significantly less compared to the BTC market. The open interest on exchanges also didn’t show any abrupt changes, and leverages were also not extreme.
We can also take a look at the fear and greed index to have an idea of the next market move. When there is too much greed, we often see a dump, and too much fear is followed by price jumps. After the recent price dip, the fear and greed index fell below 40, which shows fear, and now it has increased to 50, which is neutral. This indicator shows that there is still a pump left as people are unlikely to dump at this price.
For the bull run to resume again, it will be necessary for BTC to break $60k and confirm support on the same. $60k is a fundamental level both technically and psychologically, and it will be something the bulls need to conquer. At present, we are still seeing a lot of ling traders, which signifies that yes, we might see a price rise again soon. It will be necessary to see if BTC retests $56.5k again before moving up.
What are your thoughts on $56.5k being the bottom in Bitcoin’s recent price drop? And do you think we will test the level again before moving up? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.