By
Josh O'Sullivan
April 30th, 2024
Analysts are hopeful of the Bitcoin price recovery stating that the shakeout was just to weed out excess leverage and weak hands.
Bitcoin price experienced its most significant daily decline in almost four months, undergoing a substantial leverage wipe-out over the past 24 hours. The sudden and sharp correction, often referred to as a “flash crash”, saw BTC drop from approximately $43,800 to nearly $40,500 within a few minutes on Sunday evening.
Bitcoin Price Movement
Although prices swiftly rebounded to $42,400, they later declined again during US afternoon hours, reaching as low as $40,200. At press time, Bitcoin is trading at $41,888 with a market cap of $819 billion.
Popular crypto analyst Will Clemente said that correction shouldn’t be a surprise given that the BTC price doubled just in the last two months. “BTC just nearly doubled in 2 months with no pullbacks, a correction is not that surprising. Corrections shake out ‘weak hands’ and leverage, allowing for a stronger foundation for eventual moves higher,” he said.
The downturn resulted in the liquidation of more than $520 million in leveraged trading positions within the cryptocurrency derivatives market, primarily affecting long positions anticipating price increases, as per data from CoinGlass. This marked the most substantial daily volume of liquidations in at least three months, according to the firm.
Market strategist Joel Kruger from LMAX Group observed that the escalating liquidations of leveraged long positions contributed to the ongoing market decline, with traders encountering margin calls. Additionally, the increased strength of the US dollar could have further contributed to the weakness in the cryptocurrency market.
However, the LMAX market strategists suggest that cryptocurrency prices could experience a rally to new highs by the year-end, given that the recent pullback has cleared excess leverage and reset the market.
Bitcoin Faces Strong Resistance at $44,000
The persistent correction in the Bitcoin market is due to the strong resistance at the $44,000 supply zone. According to the Lookintobitcoin golden ratio multiplier indicator, which analyzes Bitcoin’s adoption curve and market cycles, the 1.6 multiplier target has reached the vicinity of $44,000. It’s worth noting that BTC has remained in this range for the past week, struggling to decisively surpass it. In simpler terms, Bitcoin is encountering strong resistance from a congested area of suppliers, creating a challenging obstacle for bullish movements.
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Photo: LookOnChain
- Moreover, on-chain data from IntoTheBlock’s also emphasizes the resilience of the barrier at $44,000. The IOMAP chart indicates that this level falls within the $43,346–$44,627 price range, where approximately 585.77 BTC was previously purchased by around 1.43 million addresses. Any efforts to push the price beyond this level could face robust selling pressure from this group of sellers aiming to break even
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Photo: IntoTheBlock
- Read other Bitcoin news on Coinspeaker.