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Bitcoin Price Down 8% From $72,000 to $66,200 Since Tuesday — Is BTC Headed Lower?

Published May 24, 2024 1:29 PM
Nikola Lazic
Published May 24, 2024 1:29 PM
By Nikola Lazic
Verified by Peter Henn

Key Takeaways

  • Bitcoin approached it all-time high, climbing to $72,000, before retreating back to $66,200.
  • Increased BTC deposits correlate with price decline.
  • There are two possible outcomes. Either Bitcoin reaches a new all-time high or it goes into a corrective downturn.

On Tuesday, May 21, the price of Bitcoin reached $72,000, which was only 2.6% off from its all-time high. However, since then, it has dropped, falling to $66,200. It was from there BTC made its last upturn.  

These reversions are usually the first indication the market is losing strength, with the price retracing 100%. But, as we previously saw a breakout above a descending channel that lasted for over two months, the price is back at its resistance to retest it for support. 

This raises whether Bitcoin made a double top and is now heading down, or is it just a retest before BTC climbs to a new all-time high? 

Bitcoin On-chain Data 

The first chart we examine to understand better the fundamental forces behind price movements is the number of Bitcoins held on exchanges . On Monday, May 20, this number fell to its all-time low of 1,914,152 BTC

Bitcoin
All exchange reserves | Source: CryptoQuant

The next day, it started rising, indicating that Bitcoin holders were exerting selling pressure as they deposited on exchanges. We can see a correlation between the price decline and the number of Bitcoins deposited, which was 1,932,912 yesterday. 

This means that 18,760 deposited led to an 8% decline in Bitcoin’s price and that there is fundamental pressure on the price. However, the derivatives added to the slump. 

Bitcoin
Liqudation data | Source: CoinGlass

Looking at the liquidation data from CoinGlass , we can see an increase in long liquidations yesterday, May 23. A total of $55 million longs were liquidated, values last seen on May 1, when Bitcoin crashed below $60,000. 

BTC Price Analysis 

Since its all-time high of nearly $74,000, Bitcoin‘s price has formed a descending channel. On May 17, a breakout occurred, but today’s interaction with its resistance is setting up two potential scenarios ahead. 

Bitcoin
BTCUSD | Credit: Nikola Lazic/Tradingview

Either the uptrend from May 1 is a major one with a new all-time high ahead or it is the second sub-wave of a larger correction. If the first is true, Bitcoin will bounce from the descending channel’s resistance, validating it as support. 

According to this scenario, the price is currently in its fourth wave, so after it ends, another high should lead Bitcoin above $78,000. However, a bearish scenario might be more likely if the price enters the descending channel again. 

In this case, the rise from May 1 will end as a three-wave one, indicating correctiveness behind the move. From its all-time high, Bitcoin would be in a larger wave four correction, sub-divided into WXY waves. Tuesday’s high would mark the end of wave X. If this happens, another downtrend to $55,200 area would be expected. 

The differentiating factors will be the interaction result with the descending resistance.

Disclaimers

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.

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