Bitcoin (BTC) has been on a bearish trend in the last 24 hours, with a sharp drop in its price, sending ripples across the cryptocurrency market. The leading cryptocurrency saw a sudden 5% drawdown, tumbling from $68,341 to as low as $65,110 within just 60 minutes during late New York session trading hours on April 12. This downturn resulted in significant losses for traders, with over $400 million in leveraged positions liquidated across Bitcoin and various altcoins.

BTC/USD 24-hour price chart (source: CoinMarketCap)

At press time, BTC was still in a bearish trend, with price trading at $67,455, a 4.56% decline in the last 24 hours. Concurrently, BTC’s market capitalization dipped by 4.55% to $1.33 T, while the 24-hour trading volume surged by 62% to $48.1B. This surge in trading volume suggests that traders are taking advantage of the dip to accumulate. 

The flash crash in Bitcoin’s price triggered a cascade of liquidations, totaling over $417 million in leveraged positions wiped out within an hour. Bitcoin longs accounted for over $77.93 million of the losses, while Ether longs contributed more than $63.35 million to the overall figure. Binance and OKX were among the hardest-hit exchanges, with combined losses totaling $171 million and $158 million, respectively.

The sudden downturn in Bitcoin’s price comes just a week before the highly anticipated halving event, which will see the block subsidy reward for miners halved from 6.25 BTC to 3.125 BTC per block. With the halving event looming, traders are bracing themselves for increased volatility in the cryptocurrency market.

Bitcoin Halving Countdown: One Week Away

According to The Block’s Bitcoin Halving Countdown page, Bitcoin’s next halving event is just one week, or approximately 1,000 blocks away. Scheduled to occur around April 20, the halving will significantly reduce the block subsidy reward for miners from 6.25 BTC to 3.125 BTC per block.

Halving events in Bitcoin’s history have often been accompanied by significant fluctuations in the cryptocurrency’s price. While not directly causal, these events have historically preceded notable bull runs in the Bitcoin market. However, there are uncertainties surrounding the impact of the upcoming halving, with market analysts noting increased implied volatility in options expiries.

BTC Mining Difficulty

Bitcoin’s mining difficulty has also hit an all-time high in the final adjustment before the halving, signaling increased competition among miners. This adjustment aims to ensure that, on average, a new block is found every 10 minutes, regardless of fluctuations in computational power dedicated to the network.

Market Analysis and Future Outlook

Despite the recent price drop, some analysts see potential buying opportunities in Bitcoin’s current price levels. Traders who resisted FOMO (Fear of Missing Out) as Bitcoin approached $72,700 levels earlier may find the downturn a chance to enter the market. However, technical indicators suggest that a recovery may not be imminent, with indicators such as the Relative Strength Index (RSI) remaining below the ’50’ mean level.

Bitcoin is currently trading within an ascending triangle pattern, indicating a potential upward breakout with a target near $82,000. Analysts are closely monitoring this pattern as the halving approaches, which traditionally trigger significant price volatility. Despite the current bearish trend, there is a consensus that Bitcoin might test higher resistance levels, potentially reaching up to $85,000 if it breaks out from the current pattern.

Adding to the complexity, Bitcoin’s price behavior around the 200-week moving average is crucial. This average often acts as a significant psychological and technical level, where past cycles have seen the lowest prices before a bullish reversal.

BTC Price Chart

Market sentiment analysis indicates areas to watch: orange and red zones suggest overheating, possibly warranting a sale, while purple zones indicate potential buying opportunities.

Market Sentiment and Strategy Amidst Liquidation

The market has recently witnessed a substantial liquidation event, with major cryptocurrencies and particularly altcoins facing severe downturns. Midcap tokens, often more volatile, saw declines of 25% to 30%, illustrating the cascading effect of fear-driven sell-offs. This pattern is reminiscent of the market reaction following regulatory actions, such as the SEC lawsuits against major exchanges like Coinbase and Binance.

For traders and investors, these periods of heightened volatility and panic selling may represent strategic entry points. Historical data suggests that such downturns can be ideal times for dollar-cost averaging (DCA), especially in altcoins that have undergone significant corrections.