Bitcoin drops into panic and liquidation territory

[Ben Graham]

Bitcoin's fall below the $90,000 mark did not trigger active buying, and by the end of today's Asian session, the leading cryptocurrency reached a low around $85,500, where it again failed to attract significant purchases from major players.

Several experts note that BTC has fallen below the average cost of purchases for institutional investors in spot BTC ETFs, indicating the onset of a panic and liquidation season. The losses incurred by buyers exceeding $1 billion in the market just yesterday speaks volumes. Institutional investors, previously seen as guarantors of stability and long-term growth, are now also susceptible to fear and mass sell-offs. Falling below their average purchase price could trigger a chain reaction where each new low sparks a wave of liquidations, worsening the situation and dragging BTC into a downward spiral.

However, it is important to remember that the crypto market has always been characterized by its volatility and unpredictability. While the current decline can be painful, it also presents opportunities for new players and strategic investors ready to capitalize on the situation and acquire assets at attractive prices.

The situation with BTC serves as both a warning signal and a chance for reevaluating strategies. The market demands flexibility, adaptability, and the ability to navigate a dynamically changing environment. Only those willing to learn from their mistakes and respond quickly to new challenges will survive and thrive in this era of crypto turbulence.

After reports of renewed capital inflows into the BlackRock spot BTC ETF on Wednesday, record outflows were again recorded yesterday. This suggests that the market remains under stress, exacerbated by the exodus of capital from the spot ETFs that were previously holding everything together. This dramatic shift in sentiment highlights the fragility of faith in cryptocurrency assets, even when backed by major institutional players. The outflow of capital, surpassing previous records, has essentially pulled the rug out from under the bulls, leaving them confused and disheartened. The capital flight from these funds puts additional pressure on BTC and other cryptocurrencies, creating a vicious cycle where falling prices provoke further sell-offs.

Trading recommendations:

Regarding the technical picture for Bitcoin, buyers are currently targeting a recovery to the $86,500 level, which opens a direct path to $89,200, and from there it is only a short step to $92,900. The furthest target is around $95,500; surpassing this level would indicate attempts at a return to a bull market. Should Bitcoin decline, buyer interest is anticipated at the $83,900 level. A drop below this area could quickly push BTC down to around $81,200, with the most distant target at $78,200.

For Ethereum, clear consolidation above the $2,924 level opens the path to $3,068. The furthest objective is around $3,193; breaking past this level would signify a strengthening of bullish market sentiment and renewed buyer interest. If Ethereum declines, buyers are expected at the $2,797 level. A move below this area could swiftly bring ETH down to around $2,662, with the most distant support at $2,524.

What we see on the chart:

- Red lines indicate support and resistance levels where either a price slowdown or active growth is expected;

- Green lines indicate the 50-day moving average;

- Blue lines indicate the 100-day moving average;

- Light green lines indicate the 200-day moving average.

Typically, a crossover or price test of these moving averages either halts market momentum or sets a new directional impulse.

The material has been provided by InstaForex Company - www.instaforex.com