Wednesday, May 22, 2024

Bitcoin price target at $50K after breaching key support level.

The price of bitcoin fell 5.42% in the previous day, reaching a new multi-week low of $57,151 on May 1. New lows for Bitcoin may be in store, as on-chain data indicates that the recent decline may have been caused by a halt in the rise of demand for the cryptocurrency and an increase in open short positions.

According to a report from CryptoQuant, the recent drop in Bitcoin prices is due to a slowdown in demand, which is exhibited by a dip in the growth of permanent holders’ Bitcoin balances, a slowdown in the demand for spot Bitcoin ETFs, and an increase in short positions in the futures market.

According to data from CryptoQuant, demand for Bitcoin among permanent holders—investors who buy and hold the cryptocurrency—dropped by 50% in April from over 200,000 BTC in late March to over 90,000 BTC.

This measure “reached levels similar to early March, when Bitcoin also experienced a meaningful correction,” according to the above chart, which shows that it fell 7% right after breaking through its all-time highs.

Since late March, whale demand has been decreasing. CryptoQuant researchers have observed that a slower increase in large investor demand typically drives corrections in the price of bitcoin.

The experts contributed to the sell-side pressure by stating that the U.S. market’s dropping purchases of spot ETFs demonstrated the slowdown in Bitcoin demand.

“After peaking at over $1 billion in mid-March, the daily purchase of Bitcoin from ETFs has plummeted to almost zero currently,” the research stated, noting that a fresh wave of Bitcoin purchases from ETFs is required to revive demand growth.

The on-chain data analytics company also utilised the statistic of “traders’ unwillingness to pay more to open long positions” in conjunction with the fact that sell orders are outpacing buy orders to explain the decline in Bitcoin demand.

The fact that Bitcoin’s financing rate has fallen to a one-year low suggests that traders are not prepared to “pay as much as before to open long positions.”

As per the research, traders who opened short positions with the expectation of more price declines are the ones responsible for the recent decrease in prices.

Analysts concur that the price of bitcoin is most likely to decline

Participants in the market are curious about how low the price of Bitcoin can drop before a trend reversal happens due to the current market correction.

Within the demand range of $55,000 to $57,000, or “10% below the current cost basis of traders of $63,000,” is where CryptoQuant analysts have put their lower objective. In bull markets, traders’ cost basis has been observed to provide price support.

“Traders’ cost basis is already being surpassed by the price of Bitcoin today.”

According to well-known analyst Scott Melker, the price of bitcoin can only drop to $52,000 in the near future. Melker stated that, given that the daily RSI hasn’t reached an oversold level, the drop is still modest for a bull market.

Even so, it’s still only a 23% correction, which is very little in a bull market and in line with previous corrections during this run. We have not yet witnessed a 30–40% decline during this bull market, unlike previous ones.

Moreover, Bitcoin researcher Tuur Demeester noted that BTC was trading at $60,409 and predicted that, given the loss of the $60,000 support, Bitcoin may now target $50,000 as its next target.

According to well-known analyst Scott Melker, the price of bitcoin can only drop to $52,000 in the near future. Melker stated that, given that the daily RSI hasn’t reached an oversold level, the drop is still modest for a bull market.

Even so, it’s still only a 23% correction, which is very little in a bull market and in line with previous corrections during this run. We have not yet witnessed a 30–40% decline during this bull market, unlike previous ones.

Moreover, Bitcoin researcher Tuur Demeester noted that BTC was trading at $60,409 and predicted that, given the loss of the $60,000 support, Bitcoin may now target $50,000 as its next target.

According to trader and analyst Mags, investors should “expect a much deeper retracement, till $40,000 and even lower,” if Bitcoin closes below $60,000 on the weekly timescale.

“There have been four pullbacks between 20 and 22% thus far in this cycle. A -22% correction from the local high would place us between $58,000 and $57,500 if we see something similar.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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