How Far Can the Price Fall?

Bitcoin has seen a significant drop in recent days. After reaching a new all-time high of $73,750, the price temporarily plummeted to $65,000. Yet experts believe that this decline is only a temporary setback in a further upward trend. Over the past two months, bitcoin climbed 91% from $38,555 to its latest high. This increase initially seemed sustainable, partly due to an increase in trading volume and large inflows via bitcoin ETFs. But now there are concerns about the increase in leverage in the crypto market. In this article we examine these concerns further.

IntoTheBlock foresees an overheated market

Analytics platform IntoTheBlock reports that bitcoin borrowing costs on exchanges such as Binance and Bybit have reached their highest point since 2021. This indicates increased trading activity and could indicate an overheated market. Selling pressure over the weekend sent bitcoin’s price down to around $65,000.

Investors are now looking at the 23.6% Fibonacci retracement level as possible support during this correction. If selling pressure continues, the price could fall further to $60,300 or even $56,200, corresponding to the 38.2% and 50% Fibonacci levels.

https://twitter.com/intotheblock/status/1768631569999114587

Historical pullback patterns and potential correction

An analysis of the anonymous trader Bags shows that bitcoin has consistently had a 38% pullback in its first two cycles. Despite more volatility in the third cycle due to the COVID-19 pandemic, this pattern appears to be repeating itself. Applying this pattern to the recent peak of $73.5K, bitcoin’s correction target could be at $45.5K.

pre halving pull backs:

1st cycle -38%

2nd cycle -38%

3rd cycle (ignoring covid wick cause outlier) – 38%

currently -38% off of $73.5k = $45.5K pic.twitter.com/DEbYwcIsx7

— Bags (@0xbags) March 15, 2024

As the market goes through these swings, the sustainability of the bitcoin price and the impact of leverage concerns remain key concerns for traders and analysts. Yet many analysts expect that this is part of a healthy correction, and that bitcoin can pull the crypto market back to new all-time highs. For the time being, the bulls must mainly ensure that important support levels are overcome again.