Market Sentiment Shift as Bitcoin Drops
Bitcoin is on the verge of a significant market shift as it plummets below the psychological $60,000 mark, with potential to fall further to $50,000. This forecast comes from 10x Research, which attributes the decline to dwindling buy flows and accelerating sell flows.
On July 4, Bitcoin's price dipped from over $60,000 to $57,000, marking a sharp downturn. Markus Thielen, an analyst at 10x Research, remarked that the signs of an overbought market were evident as early as June, hinting at a needed correction.
The breaking of the $60,000 support level is a crucial event, as it marks a substantial shift in market sentiment. 10x Research notes that the drying up of buy flows and the acceleration of sell flows are key factors contributing to this decline. The sell-off is anticipated to intensify as sellers scramble for liquidity, potentially pushing Bitcoin's price down to $50,000.
Impact on Investor Sentiment and Market Liquidity
The sudden 5.44% fall in Bitcoin's price has had a profound impact on investor sentiment and market liquidity. This decline is reflected in Bitcoin's $1.1 billion market capitalization and a 57% increase in trading volume.
The 10x Research report emphasizes that breaking the key support level for Bitcoin miners and spot Bitcoin ETF buyers could lead to accelerated price declines. The anticipated Mt. Gox repayments of $8.5 billion worth of Bitcoin, set to begin in July, coincide with this sell-off, further contributing to the market's instability.
The report suggests that only ill-informed traders are willing to buy Bitcoin at this point, indicating a potential lack of confidence in the market.
Long-Term Holders Contribute to Selling Pressure
Recent analysis from IT Tech highlights that long-term Bitcoin holders are cashing in on substantial profits, adding to the selling pressure. The spent output profit ratio (SOPR) from long-term holders exceeded a value of 10 on July 3, indicating that these holders sold their BTC for at least 10 times the initial purchase price.
Typically, long-term holders retain their holdings for five to seven years, and their decision to sell now underscores the current market volatility. The 10x Research report advises traders to prioritize risk management and prepare for continued volatility. The cautious outlook suggests that this is not the time for complacency, as the market faces significant downward pressure.
