Bitcoin [BTC] has been grappling with a continuous decrease in value recently, as individual traders aggressively seize the opportunity to purchase during declines.
The market has displayed a remarkable contrarian attitude, with prices moving in opposition to the general expectations.
Traditionally, market rebounds tend to happen once excitement for purchasing during declines among individual investors diminishes. Nonetheless, the prevailing pattern indicates that positivity among individual investors remains high despite the ongoing downturn.
Individual Sentiment and Purchase Activity
As per data on social sentiment, discussions around ‘buying during declines’ have witnessed a significant surge in the past few days, coinciding with Bitcoin’s continued downtrend.
Throughout history, price floors typically materialize when interest from individual traders subsides. Yet, the enduring positivity has not resulted in the anticipated rebound.
Traders anticipating an immediate shift have instead witnessed a further drop in Bitcoin’s value, reinforcing the market’s tendency to penalize overconfidence.
Bitcoin Liquidations and Market Effects
Data on liquidations has revealed that traders using leverage have incurred substantial losses, with notable liquidations on long positions occurring as Bitcoin failed to regain crucial support levels.
The liquidation heatmap indicated that the recent price decline was exacerbated by successive liquidations, leading to further depreciation in prices.
An analysis showed that on the 25th of February, the highest long liquidation over the last five months for Bitcoin amounted to approximately $559 million, while short liquidation volume was around $66 million.
The liquidation trend persisted on the 26th of February with a $391 million long liquidation, ranking as the third-highest in the past five months.
This sequence has been a recurring theme, with traders who have over-extended themselves facing compelled exits, intensifying the bearish sentiment.
Bitcoin’s Price Pattern and Critical Thresholds
At the time of writing, Bitcoin was valued around $85,855, reflecting a sharp decline from recent peaks. The price has breached the psychological barrier of $90,000, and further downward movement could result in a re-examination of the $80,000 level.
Technical indicators, such as the Moving Average Convergence Divergence [MACD], have exhibited strong bearish momentum, while the 50-day and 200-day moving averages indicate continued weakness.
The next probable support point is near $83,000, a level where previous buying interest was noted.
What’s on the Horizon for BTC?
For a sustainable reversal, the fervor among individual investors must diminish, enabling a genuine market reset. If the buying pressure from individual traders dwindles, a momentary relief rally might emerge.
Nevertheless, considering the current market dynamics, Bitcoin remains susceptible to further decline before a substantial recovery unfolds.
Traders should keep an eye on liquidation levels and trends in individual sentiment to ascertain when the market could stabilize and veer away from its downward path.