A new report suggests that Bitcoin BTC/USD could drop to $50,000 if it fails to maintain support above the crucial $60,000 level.
What Happened: The report by 10x Research states that a break of the $60,000-$61,000 range could cause liquidations.
“During extremely low volume periods, the well-timed weekend pump caused waves of liquidations on the upside (shorts being stopped out). Simple attempts to trigger those buy stops were successful, but there is now less upside risk from short covering—quite the contrary – the downside risk is now real,” the report states.
The analysts warn that breaking below this psychological threshold could trigger a rapid descent to lower support levels, potentially reaching as low as $50,000.
The research firm points out that the recent weekend pump might have been a temporary reset of oversold conditions before the downtrend resumes.
“The combination of longer-term technicals, on-chain signals, flows (especially from miners’ inventory), and market structure data could overwhelm, at least in the near term, the potential bullish arguments,” the report states.
One of the key concerns highlighted is the stress on Bitcoin miners.
The report notes, “The hash rate declines from 650m TH/s to 550m, indicating miner stress, and the average breakeven rate for mining Bitcoins appears to be close to $60,000.”
This pressure could force miners to liquidate more of their Bitcoin holdings to fund operations, potentially flooding the market with supply.
On-chain indicators are also flashing warning signs. The report mentions that “Various on-chain indicators are also flagging a potential cycle peak. The ninety-day coin days destroyed have potentially rolled over.” This suggests that long-term holders may be starting to sell their positions.
Also Read: ‘Good Chance Crypto Voters Will Make The Difference In This Election,’ Matthew Sigel Says
Why It Matters: The research also touches on broader economic factors, noting that the U.S. ISM Manufacturing Index, a leading indicator for the US economy, may have reached a cyclical high in April.
Historically, peaks in this indicator have corresponded with high-risk periods for Bitcoin.
Adding to the bearish outlook, the report points out that “stablecoin minting has been flatlined since the April Bitcoin halving, which explains why Bitcoin has struggled during the last few months. All three data points [ETF inflows, futures leverage, and stablecoin minting] have stopped adding liquidity.”
The analysts at 10x Research emphasize the psychological importance of the $60,000 level, stating, “Psychologically, breaking the 60,000 Bitcoin price would be damaging, as prices could drop quickly to the nearest support level, which might be $55,000 or even $50,000.”
They warn that this could trigger a cascade of liquidations, particularly among Bitcoin ETF holders and miners.
As the cryptocurrency market faces these potential headwinds, industry participants and investors are keen to gain deeper insights into market dynamics and future trends.
The upcoming Benzinga Future of Digital Assets event on Nov. 19 is poised to be a crucial forum for discussing these market developments and their implications.
Image: Shutterstock
Read Next:
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
