Bitcoin (BTC) has experienced a decline of over 6.5% in the past two days after reaching a peak of $88,000 earlier this week.
Recent data indicates that Bitcoin’s price fell from a high of $87,500 on March 28 to a low of $81,900 on March 29.
The downturn in Bitcoin’s price corresponds with a broader market sell-off prompted by uncertainties surrounding trade tariffs and disappointing economic indicators. This triggered a sell-off in stocks, leaving investors questioning how much further the market could decline.
Bitcoin Erases Liquidity with Drop to $81,000
As losses continued on March 29, BTC was down 3% over the previous 24 hours, hovering just above the $82,000 mark.
Key observations include:
- BTC’s price dipped as low as $81,983 on Bitstamp, erasing all earlier gains from the week.
- This downturn coincided with U.S. inflation data that surprised analysts with higher-than-expected results.
- The Personal Consumption Expenditures (PCE) Index for February showed an acceleration in inflation, contrasting with January’s figures.
- While the month-on-month and year-on-year PCE readings aligned with market expectations of 0.3% and 2.5%, their core PCE equivalents exceeded forecasts by 0.1%.
- The imminent implementation of extensive U.S. tariffs, anticipated on April 2, has also heightened investor anxiety.
- Over the last 24 hours, liquidations in the crypto market reached $338 million, highlighting significant market volatility.
- Bitcoin alone accounted for over $165 million in long position liquidations between March 28 and March 29.
Additional insights reveal strong buying interest within the $70,000-$80,000 range over the past six months, suggesting that Bitcoin’s price may need to decrease further to capture liquidity in this area before a potential rebound.
Short term indicators suggest that Bitcoin has cleared out a considerable amount of liquidity, with a local bottom estimated between $82,000 and $80,000. Analysts indicate that with short liquidation levels positioned above $88,000, Bitcoin might be undergoing a standard weekend correction, possibly paving the way for a reversal the following week.
"Typical weekend dump with next week’s reversal? At least, this is a possible scenario."
Bitcoin Bear Flag Signals Possible Decline to $62,000
From a technical standpoint, the price drop on March 29 is interpreted as part of a prevailing bear flag pattern.
Key points to note:
- A bear flag typically signifies ongoing bearish momentum, with sellers gaining control.
- A brief consolidation (flag) occurred near $88,000, indicating an unsuccessful attempt to break out.
- Bitcoin has since fallen below critical support levels, including the flag’s lower boundary at $85,800 in conjunction with the 200-day simple moving average (SMA).
- This breakdown has solidified the bearish flag pattern, suggesting additional losses ahead.
The projected downtrend from this pattern suggests a potential fall toward $62,000, equating to a 25% decline from current levels. Additionally, the relative strength index remains below the midpoint, reinforcing the continued bearish trend.
An expert indicates that Bitcoin is likely to see more downward movement as the trend persists. The possibility of retesting the lows around $76,600 before moving upwards was also pointed out.
"It seems to be crucial that we’re observing more downward momentum in the markets for Bitcoin. The trend still reflects lower highs and lower lows. Could we be poised for a test at the lows before rebounding?"
Alternative analyses propose that Bitcoin might correct to the $72,000-$75,000 range if liquidity conditions stay consistent. Meanwhile, experienced traders suggest that Bitcoin may be heading towards $65,635 after confirming a “bear wedge” pattern.
This content does not provide investment advice or recommendations. All trading and investment activities involve risks; readers are encouraged to perform their own research before proceeding with decisions.