The cryptocurrency market is currently facing significant bearish pressure, with Bitcoin (BTC) struggling to reclaim previously crucial support levels.
This downturn marks a stark contrast to the bullish sentiment observed earlier in October, when Bitcoin surged to record its current record high slightly above the $126,000 mark due to a wave of margin buying.
However, the euphoria was short-lived, as approximately $20 billion in leveraged positions across the crypto market were abruptly liquidated just days later on October 10, contributing to the ongoing lack of confidence among investors.
Market analytics firm CryptoQuant has pointed out that Bitcoin’s drop below its 365-day moving average near $102,000 could signal a deeper retreat. This moving average has historically acted as a critical support level during this bull cycle, and its failure to hold could lead to a more substantial correction in Bitcoin’s price.
This decline was influenced by a stronger dollar and ongoing uncertainties regarding Federal Reserve (Fed) policy, which have dampened broader risk appetites across various asset classes.
This diminished demand in the spot market has coincided with forced deleveraging, resulting in over $1 billion in long liquidations at recent lows, which briefly breached intraday support before dip buyers stepped in.
The $100,000 mark now stands as a psychological barrier, and any stabilization in ETF flows could shift market sentiment, provided no new macroeconomic shocks occur.
The Federal Reserve’s recent 25 basis point cut in October, which included some dissenting opinions, was accompanied by a cautious tone that pushed back against expectations for another cut in December.
For Bitcoin to break higher sustainably, CryptoQuant’s analysis suggests that a reversal in exchange-traded fund outflows and renewed confidence in risk assets will likely be necessary.
Featured image from DALL-E, chart from TradingView.com
