After a period of calm, the cryptocurrency market has taken a new turn. Bitcoin [BTC] has recorded a noticeable decrease with a prominent red candlestick on its daily chart, indicating a 5% decline.
The cause of this drop isn’t related to overheating this time. So, what is driving this change in direction?
Speculations are swirling around the possibility of another instance of “manipulation.” Without any clear technical indicators forewarning a downturn, this recent fall seems to be more strategic rather than a natural correction in the market.
Regardless, the stakes are exceptionally high
Fresh data has just been released, unveiling robust PMI figures, increased job vacancies, and a remarkably resilient U.S. economy. However, following this revelation was a significant crash in volatile assets, marking the second substantial blow in less than a month.
The initial crash of Bitcoin witnessed a drop to $91K shortly after surging to an all-time high of $108K. In a characteristic move by Bitcoin, it swiftly recovered, reclaiming the $100K mark within just seven days.
In a similar vein, the recent decline in BTC could be interpreted as a positive signal. Despite the U.S. dollar index [DXY] hitting a peak of 109.27, a 5% dip still demonstrates resilience.
Furthermore, Bitcoin has a history of bouncing back, particularly when institutional investors step in to enhance liquidity, potentially indicating an upcoming supply shortage.
Nevertheless, there is a shadow of doubt casting over this recovery: the prevalent “high-risk” sentiment prevailing in the market. With long positions worth over $114 million wiped out, Funding Rates are steadily diminishing, creating a psychological hurdle, especially for individual investors and day traders who might be awaiting an opportune moment to re-enter the market for better returns.
The critical factor to watch is if the gap between $102K and the current price widens sufficiently, it might serve as the catalyst to restore confidence in the market.
So, Where Will Bitcoin’s Next Bottom Be?
As discussed earlier, when Bitcoin plummeted to $91K, it staged a strong recovery. A closer examination reveals that at that juncture, retail investments flowed back into the market, with net outflows reaching $25K — the highest in a month.
However, the interesting twist lies in the fact that although the net flow has turned negative, it is far from those levels, currently standing at a mere $5K.
This suggests that the anticipated “buy-the-dip” moment has not yet fully materialized, supporting CryptoCrypto’s hypothesis that the market is awaiting the right trigger.
With the wounds from the recent crash still fresh, expecting an immediate turnaround might be overly optimistic. Patience is likely to be tested. While a sharp reversal may not be on the immediate horizon, a more substantial pullback to the range of $89K to $91K could present a promising entry point to monitor.