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Crypto analyst Melika Trader has raised concerns about a potential 60% drop in the Bitcoin price due to declining volume. The analyst’s analysis delves into the implications of such a price decline and its impact on the ongoing bullish trend.
Anticipating a 60% Bitcoin Price Plunge to $49,000
In a TradingView post, Melika Trader outlines a scenario where the Bitcoin price could plummet by 60% to $49,000. The analyst points out that BTC is currently teetering above a vital support level that many traders identify as the most significant support level in terms of volume on Binance.
Further Reading
According to the accompanying chart, a potential 60% drop in the Bitcoin price could occur once it breaches the former trend line at $75,000. With the loss of critical support around $83,000, Bitcoin could tumble to $49,000, returning it to a high-volume range near $30,000.
This bleak outlook suggests significant downside for the Bitcoin price. However, Melika Trader introduces a twist by suggesting that only 20% of traders may face losses. The majority of buying activity and position accumulation, as indicated by Binance’s volume profile data, occurred below $35,000.
The analyst also highlights that the majority of long-term holders and institutional investors entered the market during the accumulation phase of 2022/2023. The Volume Profile Visible Range (VPVR) indicates strong support below the current Bitcoin price, with minimal trading volume at higher levels. Melika Trader notes that only a minority of traders purchased BTC during the late-stage bull run above $70,000.
Despite the potential price drop to $49,000, most investors remain in a profitable or break-even position. Therefore, the majority of traders are shielded from losses, even in the face of a significant Bitcoin pullback.
Indicators Suggesting the End of BTC’s Bull Market
CryptoQuant’s CEO, Ki Young Ju, recently declared the end of Bitcoin’s bull market amidst the cryptocurrency’s price decline. He referenced the ‘Realized Cap’ metric to support his assertion that the bull run has concluded. Ki Young Ju explained that a growing Realized Cap combined with a stagnant or decreasing Market Cap signifies capital inflow without corresponding price increases.
Further Reading
According to Ki Young Ju, this divergence signals a bearish trend, which is currently unfolding. Despite notable inflows like MicroStrategy’s purchases, the Bitcoin price is not responding positively due to substantial selling pressure in the market.
Ki Young Ju reiterates that current data points towards Bitcoin entering a bear market phase. While sell pressure may alleviate in the future, historical patterns suggest that true reversals take a minimum of six months to materialize. As a result, a short-term recovery seems unlikely in the near term.
At the time of reporting, Bitcoin is trading around $77,000, experiencing a decrease of over 7% in the last 24 hours, as per CoinMarketCap data.
Featured image from Unsplash, chart from Tradingview.com