Bitcoin price has been a volatile , and market participants are becoming somewhat restless. The price is printing its second bearish daily candle after failing to breach the $64,000 level during the most recent upswing. This made traders resume short positions—newer lows below $60,000.
Bears’ activity indicates that Bitcoin and the entire market may face bearish pressure for an extended period. At the time of writing, Bitcoin (BTC) was trading at $60,921, which was 2.70% lower than the 24-hour peak of $63,015.
BTC/USD 24-hour price chart (source: CoinMarketCap)
BTC Short Positions Accumulate as Bears Dominate
Over the weekend trade, Bitcoin prices did manage to extend their upswing above $63,500 and attracted more participants to the platform. However, many traders preferred to take profits rather than infuse more liquidity. This profit-taking behavior prompted BTC price failing to sustain above $62,500. This trend comes as 20% of the Bitcoin supply was exchanged at $62,000—the latest drop catalyst.
Some shorts have accumulated at $62,500, and this means that there is a possibility that a rebound to these levels could lead to almost $1 billion worth of shorts being liquidated. The active address count recently reached above 900K at the beginning of this month, indicating renewed interest in Bitcoin.
The active address count recently spiked to more than 900K at the start of this month showing that more people are using Bitcoin again.
However, the increased activity has not yet been reflected in the price increase but has made the fight for a level above $62,500 even more difficult.Therefore, there are fears that Bitcoin’s price may drop below $59,000 in the upcoming days.
Charles Edwards, the founder of Capriole Investments, identified several on-chain metrics to show a “sign of weakness” in the price of Bitcoin. The inflation rate among long-term holders of Bitcoin has been growing for two years and is now very close to reaching a critical threshold, which usually comes before a cycle top.
Upcoming Events and Potential Market Movements
Finally, the Bitcoin Dormancy Z-score has skyrocketed over the last 90 days, indicating that the spent coin’s age is much greater. Historically speaking, peaks in this measure show a top three months down the line, which would correspond to now. Some things that may affect the price of Bitcoin in the near future: Mt. Gox creditors who may introduce selling pressure if 142,000 Bitcoins ($9 billion by current rates) are released.
This suggests that a majority of the creditors are probably long-term investors. However, even slow selling could impact the market. Also, some rely on the Federal Reserve’s position regarding interest rates as a possible influence.
There is concern over Fed Chairman Jerome Powell who seemed to have some concerns over rate cuts, and others worry that such a liquidity crunch with Bitcoin could trigger such a risk-off sentiment. The miners have also been cashing out their BTC to meet various expenses, which is also putting more pressure on the prices to fall.
