Bitcoin price has shown a strong recovery today, rising by 4% to trade above $58,000, having fallen to $56,150 the previous day. This recovery came after the release of new unemployment data in the United States, which seemed to cause some turbulence in the cryptocurrency market.

Long and short traders experienced difficulties, with the market experiencing significant liquidations of around $75 million within a single day, as obtained from CoinGlass.

The intense fluctuations were observed by the members of the market who pointed out the day’s turnover as a “sweeping masterclass”. The rapid price decline and the subsequent price increase was something that left many traders in the lurch and led to a liquidation of positions across the board. Even so, Bitcoin has not yet reclaimed crucial levels that traders use to assess the mood of the market.

Bitcoin Death Crosses Signal Potential Further Downside

Various market analysts have noted several death crosses that have formed on the Bitcoin charts. A death cross refers to a situation where the short-term moving average goes below the long-term moving average, which is a bearish signal.

On 15th August, Bitcoin’s 50-day SMA fell below the 200-day SMA and this crossover has in the past tended to point to short term bearish sentiment.

Material Indicators, a trading resource, pointed to the death cross on the four-hour chart, which can help determine the longer support level for Bitcoin. Nonetheless, the general market outlook is still rather cautious, with some experts believing that Bitcoin may return to the $45,000 range. This level is characterized by an upward trendline which some traders interpret as a possible support if the market is to further decline.

Negative Funding Rates and Institutional Interest

In the derivatives market, negative funding rates have become an issue of concern among analysts. According to the on-chain analytics platform CryptoQuant, the funding rates of Bitcoin on Binance have gone into the negative territory for three days in a row, which has not happened since October 2023. This development implies that short positions are at the moment dominant in the perpetual futures market which is an indication of negative expectations from the traders.

Moreover, the institutional interest in Bitcoin seems to be declining at the current price levels. According to Markus Thielen, head of research at 10x Research, the seven-day minting ratio, a vital stablecoin metric that shows fiat inflow into crypto, has slowed down.

Whereas institutions have in the past purchased when Bitcoin was trading below $55,000, they seem reluctant to do so at the current trading level of around $58,000. This decline in the newly issued stablecoins suggests that institutional investors are stepping back and waiting for price drops before buying in again.