Bitcoin (BTC) price has broken below a major trendline, signaling the end of a short-term accumulation phase. The drop marks the beginning of a correction that could see BTC fall even lower before a recovery occurs. Here are some factors that market players should be aware of.
During price spikes, leverage in the ecosystem increases dramatically. This happens in traditional markets, but in crypto, it’s much more extreme. When Bitcoin’s price fell 6% on Monday, altcoins also experienced a massive drop, triggering a wave of liquidity due to high leverage. As a result, total liquidity reached $1.7 billion, according to data from CoinGlass.
Leverage was one of the main drivers of this massive drop. However, Google’s announcement of its “Willow” quantum chip may have added additional pressure, according to some speculation.
Bitcoin’s four-week consolidation ended on December 9 after a 6.35% drop. The drop, while small, broke the sloping trendline, signaling the potential start of a downtrend.
Currently, BTC is at the support level of $97,205. If this level is broken, it could trigger a drop to the support levels of $94,875 and $92,514. BTC is still seen in a short-term uptrend. However, if the $92,514 level fails to hold, the momentum will favor the sellers. The important psychological level is $90K. If the price manages to bounce from here, it could trigger a recovery. On the other hand, failure to hold this level could lead to a deep correction to $86,621.
Open Interest: Data shows a decrease from $65 billion on December 5 to $60 billion on December 9. If OI does not increase, the recovery will be difficult to sustain.
30-day MVRV: The indicator shows a value close to zero, indicating no unrealized profits. This is a positive sign, but not the best time to buy or expect a recovery. Usually, when the 30-day MVRV drops to 6%-13%, the BTC price reverses.
In conclusion, Bitcoin price predictions show a short-term recovery is less likely from a probability perspective. Data from price charts, open interest, and on-chain metrics all reflect similar caution. Therefore, investors should be cautious and avoid rushing into buying as some altcoins may surge.
