Source: Niuguoluoyao
The price of Bitcoin has dropped significantly in the past 24 hours, but there is still a possibility of a full recovery.
Bitcoin [BTC] has experienced a price adjustment in the past 24 hours. One major reason behind it could be an increase in liquidation volume.
Nevertheless, BTC is approaching a crucial support level, and a trend reversal may occur in the coming days or weeks.
Reasons for Bitcoin’s Fall
Data from CoinMarketCap shows that BTC has dropped by over 3% in the past 24 hours. At the time of writing, the trading price of BTC is $60,862.71, with a market cap exceeding $1.2 trillion.
Renowned cryptocurrency analyst Ali recently tweeted, revealing a possible reason behind this downward trend. According to the tweet, the liquidation price of BTC has surged significantly near $61,490.
Whenever the liquidation rate increases, the likelihood of a price pullback also increases. Therefore, investors may choose to exit positions once that level is reached.
The recent price drop has pushed BTC towards a critical support level.
AMBCrypto’s analysis of Bitcoin’s daily chart shows an expanding descending wedge pattern. If this bearish trend continues, investors may see BTC fall to $60,078.
At that point, BTC will have the opportunity to rebound. If this happens, the price of the king of cryptocurrencies may gain bullish momentum and reach $71,000 in the coming weeks or months.
Will BTC Rebound Soon?
Subsequently, AMBCrypto plans to examine on-chain data of the king coin to see if it is ready to rebound. Our analysis of Glassnode data reveals a bullish indicator.
Notably, BTC’s Pi Cycle Top indicator suggests that the price of BTC is below its potential market bottom. If this is true, BTC may soon turn bullish.
For beginners, the Pi Cycle indicator consists of the 111-day moving average (111SMA) and twice the 350-day moving average (350 SMA x 2) of Bitcoin’s price.
In fact, according to CryptoQuant’s data, BTC’s net deposits on exchanges are lower compared to the average level of the past seven days. This clearly indicates lower selling pressure on BTC, which usually leads to price increases.
BTC’s binary CDD is also in the green, meaning that the actions of long-term holders in the past seven days are below average. They have an incentive to hold the tokens.
With the rise in BTC’s funding rate, the situation in the derivatives market also looks good.
The Chaikin Money Flow (CMF) has also slightly increased, indicating a high probability of price increases.
However, the Relative Strength Index (RSI) supports bearish trends and has dropped significantly at the time of writing.
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