Bitcoin sell-off deepens despite oversold signals

Bitcoin sell-off deepens despite oversold signals

Market Overview

The crypto market cap has fallen by more than 5% to $2.42 trillion. This is a return to last April's lows, but the bad news is the higher rate of price decline. The cryptocurrency market has become more experienced and saturated with institutional investors, which adds liquidity and suppresses volatility, but does not change the direction. The liquidation of unprofitable cryptocurrency reserves by corporations and funds may exacerbate the downward trend.

Bitcoin was approaching $70K on Thursday morning and now trades at $71K. At current levels, Bitcoin has returned to an area that was a strong resistance from March to October 2024. This explains the current interest of bargain hunters. The RSI on daily timeframes fell to 22, the lowest since August 2023. If we look at a similar phase of the market cycle, a similarly intense sell-off in May 2022 ended with price consolidation around one level for a month, followed by a deeper dive.

News Background

44% of Bitcoin supply is in unrealised loss territory, according to Glassnode. A 30% decline from the recent peak of $108K has reduced the share of profitable coins from 78% to 56%. If the 2022 bear market scenario repeats itself, BTC could fall another 20% to $60K.

Despite the ‘disturbing similarity’ to the sell-offs of 2018 and 2022, an 80% collapse of Bitcoin from its highs is unlikely due to institutional adoption, regulated product inflows and interest rate easing, according to K33 Research.

Bitcoin reserves on Binance show no signs of outflows despite market turbulence, CryptoQuant notes.

Ethereum founder Vitalik Buterin said that the original concept of layer 2 (L2) solutions is outdated and proposed a new model for ecosystem development, shifting the focus from simple scaling to unique project features.

Solana could grow to $2,000 by the end of 2030, despite lower near-term targets, according to Standard Chartered. The target level for the end of 2026 has been lowered from $310 to $250. The blockchain will need more time to scale new use cases.

By the FxPro Analyst Team