Bitcoin Below $60K Could Trigger ‘Panic’ Selling, Crypto Analyst Says

One trader said that since March, the market has remained stable between $60,000 and $70,000, and the halving event in April did not deliver the expected increase due to the general lack of market catalysts.

Short-term Bitcoin holders, who have historically influenced market trends, could play an important role in the coming months, one firm said.

After periods where 94% of both long and short holders made profits, there was a trend towards selling, leading to significant declines over the following four to six months. If corporate demand and macroeconomic conditions weaken, the current cycle may follow a similar course.

According to FxPro trader Alex Kuptsikevich, Bitcoin {{BTC}} could see panic selling if it closes below the $60,000 level in the coming days. Crypto investors are targeting a break above $65,000 before sentiment turns bullish.

BTC briefly jumped above $63,000 during European morning hours on Monday, rattling alternative and major tokens. Ether (ETH), Solana’s SOL, and dogecoin (DOGE) gained 3% in the last 24 hours; The most gains came after BTC’s rise.

TON, the token of the Tonchain blockchain closely associated with messaging service Telegram, led the jump among the majors, rising 7%.

CoinDesk 20 (CD20), a broad-based liquid index consisting of major tokens minus stablecoins, was up 2.24%.

BTC has remained largely stable between $60,000 and $70,000 since March, and the highly anticipated halving event in April turned into a news selling game due to a general lack of market catalysts. Inflows from exchange-traded funds (ETFs) have reportedly decreased over the past few weeks, adding to the downward trend.

Alex Kuptsikevich wrote in a note to CoinDesk on Monday that price action is characterized by a series of lows and lower highs, which is a sign that investors are selling, fueled by price rises.

“There is probably pressure due to asset sales by miners and fears of tighter regulation of cryptocurrencies,” Kuptsikevich said, referring to the drop in mining difficulty following the halving in April.

“A failure below $60,000 could trigger panic selling. “In our opinion, the positive scenario will be the main scenario with a rise above $65,000, stabilizing the price at the 50-day moving average and entering the reversal area at the beginning of May,” he added.

Mining difficulty measures how difficult it is for miners to solve mathematical puzzles that accept and confirm transactions on the proof-of-work blockchain. The increase in resources required to solve these puzzles puts a strain on miners’ jobs, making them unprofitable and resulting in fewer miners.

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Short-term holders can influence declines

Elsewhere, analysts at crypto investment firm Ryze Labs said in a weekly note that the behavior of short-term bitcoin holders, or those who have held the tokens for less than 155 days, could greatly impact markets in the coming months.

Ryze Labs said there are three instances where 94% of Bitcoin holders, both long and short-term, took profits: mid-November 2017 to mid-April 2017, mid-February to mid-April 2021, and most recently, late February to early April 2024 .

Short-term and long-term investor behavior has historically preceded market movements. (Ryze Labs)

Peak values ​​of Bitcoin held by short-term investors were $117.8 billion in 2017 and $289.9 billion in 2021. During these times, long-term holders and miners sold Bitcoin to short-term holders who held it for less than 155 days.

Following these peaks, however, short-term holders’ losses increased rapidly, leading to a reversal of the cycle in which short-term sellers sold to long-term holders. The team observed that this shift has historically led to significant declines in Bitcoin prices over the next four to six months.

“In the most recent cycle, the value of Bitcoin to short holders was $218.9 billion. While most initially made a profit, they began to actively sell. Analysts noted that about a month into this period, the maximum price decline from the period high was approximately -6%.

“The current cycle may differ from previous ones due to corporate demand supported by improving macroeconomic conditions. However, if these supporting factors weaken, a Bitcoin price decline similar to past cycles could occur,” they added.