For Bitcoin, the last 48 hours have been particularly turbulent. After climbing to $58,354 on 21 February, the world’s largest cryptocurrency fell to $47,400 on the market charts.
At the time of writing, Bitcoin was priced at less than $47,000, with its market cap slipping below $1 trillion, too, after violating its immediate support level.
Exchanges witness largest Bitcoin inflows since March 2020
One of the bullish narratives supporting Bitcoin over the past few months has been the size of bitcoin outflows reported by multiple exchanges. The narrative in question mainly revolved around users taking Bitcoin off-exchange, a sign of increasing consumer sentiment for HODLing.
Bitcoin’s price drop, however, has led to a major shift in that regard, particularly because Bitcoin’s exchange inflows have registered their biggest peak since March 2020. Ergo, it can be inferred that some retail investors may have been cashing in for gains during the said price dumping.
During the decline, another main factor came to the fore. As Bitcoin fell to $29,000 in mid-January, rather than becoming a negative call-out, the general community cried out “Buy the dip” on the sector.
Now, according to Santiment, “Buy the dip” calls have been exceptionally poor over the last few hours, indicating that negative social emotions have recently engulfed Bitcoin.
It’s difficult at the moment to determine the floor price. According to Ki-Young Ju, CEO of CryptoQuant, the floor price could be as low as $44,000, but it may not be lower. Young Ju argued that Coinbase whales have been accumulating bitcoin in the $44-$48k range over the past few months, with the premium fluctuating massively over the last 24 hours.
In fact, another analyst estimated that the Coinbase premium was close to neutral at press time, so an optimistic short-term reversal could occur after a steady premium was seen above zero.
Is there a need for panic in the market?
Let’s place the whole bull in perspective. In view of the fact that the new rally started at the beginning of December (i.e. the 12th), BTC was up by 168.97 per cent at press time. The new price dip is a correction of 18.65 per cent, which is relatively small after a period of 73 days.
Here, it is also important to remember that Bitcoin also experienced a drawdown in January, so the probability of a major drop is still small.
That said, Bitcoin’s current price levels need to be controlled. In order to reverse the above-mentioned Bear set-up, Bitcoin could stabilise above $54,000 over the next 24-48 hours or retain a position above $47,400.
Unfortunately, a drop below $44,000 may actually confirm a prolonged drawdown time. Even so, it’s still not time to push the panic button, not yet.
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