The price of Bitcoin has dropped sharply, with a lot of volume by 4.45% from yesterday’s high of $30,344. Currently, it is being traded at $29,187.
This sudden price drop occurred after a period of positive sentiment and led to a lower low in the price action structure, which is now painting a negative outlook.
Will it continue its downward trajectory, and if so, what key levels can serve as a stopping point?
Since it entered the territory of the upper resistance range and came up to $31,434, the price of Bitcoin has been moving sideways, and the price action has been stagnant.
As it made a higher high on June 24, compared to the one made in mid-April, we have counted the whole rise from June 15 as another five-wave impulse. This is why the seen sideways action from June 24 could have been a corrective wave 4, after which another attempt to continue the uptrend should be made for wave 5 completion.
In this scenario, the price would most likely retest the lower, support level at $28,293 from the resistance zone in which it is consolidating before making this attempt. This would be its first potential stopping point in a bullish scenario, in which we have one more push to the upside before a downturn starts.
Alternatively, in a bearish case, this attempt was already made on July 13. The spike to $31,816 made on the next day marked the completion of this five-wave move and, with it, the completion of the higher-degree impulse that started on November 21, 2022, when the price of Bitcoin was $15,728.
According to this scenario, the price has already started its downturn of a higher degree, and the formation of an A wave from the ABC correction has already been seen. If this scenario is in play, then the price of Bitcoin is headed toward the next significant support zone, which would be at around $26,000 or where the 0.382 Fibonacci retracement level is.
If the second is true, the current decline could lead the price of Bitcoin to a downfall of another 11% from the current levels where the A wave target from the ABC correction is, at around $26,000, its second potential stopping point.
Looking at the global BTC order book, which combines orders from all major exchanges, both stop and futures, we can see that there are currently more buy orders than ones on the sell side. Even though the sellers are more aggressive now, we can clearly see a strong buy wall at $28,500 which supports the first scenario in which we have one more push to the upside.
To conclude the amount of potential selling pressure, we will examine some key on-chain metrics.
On-chain transaction data shows a neutral picture. The total number of coins transferred increased by 132.92% compared to yesterday, but on the other hand, the total number of transactions decreased by -60.78% compared to yesterday.
Even with declining prices, more investors are still selling at a profit, but long-term holders’ movement is lower than a 7-day average. Net Unrealized Profit and Loss (NUPL) indicates that investors are in the “anxiety phase” with moderate unrealized profits.
The number of Bitcoin deposited on exchanges hasn’t gone up, which indicates that there isn’t any more selling pressure than it usually was in the past week.
We are even seeing a negative Netflow of 1,700 BTC, meaning that, in total, Bitcoin is withdrawn by 1700 BTC more than deposited at the moment.
It appears that the derivatives are driving this price decrease at the moment, as 23857244.16 long positions were liquidated in the last 24 hours.
The Taker Buy Sell Ratio is currently at the value of 0.899, meaning that the takers fill more sell orders and indicates a bearish sentiment.
We have seen a sharp drop in Bitcoin’s price after a period of sideways movement. This could indicate that the buyers didn’t have the strength to continue pushing the price higher and that sellers are now in control.
However, looking at the global order book and on-chain data, we can see that the derivatives market drives this decline and supports the scenario in which the price is headed for another retest of the $28,500 area where the first significant support level is located.
After a retest, we would primarily expect another attempt for the buyers to establish an uptrend toward the resistance zone’s upper level at $32,382 and potentially surpass the level.
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.