A Futuristic Outlook on Bitcoin’s Price
Bitcoin experienced a 5% decrease in price within a 24-hour period on March 20, reaching a two-week low of $60,761. This decline suggests that there may be further downside potential in the market.
Short-traders have taken control of the BTC derivatives markets ahead of the upcoming US Federal Reserve rate announcement. This has contributed to the bearish headwinds faced by Bitcoin.
Since its rejection at the all-time high of $73,840 on March 14, Bitcoin has been caught in a downward spiral. Market demand has flattened as investors await the Fed rate announcement, which is scheduled for 2pm Eastern Time (ET) on March 20, before making any significant moves.
In response to higher-than-expected inflation data from last month, BTC short traders have increased their leveraged positions in anticipation of potential price declines triggered by another rate increase.
Coinglass’ liquidation map reveals the extent of leverage that traders have applied to their speculative positions, particularly within 10% of the current prices.
As the Fed meeting approaches, leveraged short trades for BTC currently outweigh long trades by a factor of two. Short traders have amassed leveraged positions worth over $2.43 billion within the 10% boundaries of current prices, while long leverage contracts stand at $943 million at the time of writing on March 20.
This data suggests that the majority of traders are anticipating further price dips following the next rate announcement.
At the time of writing on March 20, Bitcoin is trading around $62,000.
Taking insights from the liquidation charts, if the BTC price falls below the $60,000 mark, bulls could face over $641 million in liquidations. Without adequate hedging or spot purchases, this could lead to more cascading losses.
However, historical accumulation trends provide some hope. IntoTheBlock’s in/out of the money chart indicates that the $60,000 – $61,900 range has been a significant accumulation zone for existing Bitcoin holders in the past.
Over 495,430 investors have acquired 338,320 BTC at an average price of $60,948 within that range. Given the historical tendency of traders to buy more BTC at this price level, another wave of demand could prevent a dip below $60,000.
Should that key support level break, Bitcoin’s price could drop towards the $55,500 mark before finding a more substantial demand cluster.
On the upside, if the Fed suggests rate cuts sooner than expected, it could stimulate demand for Bitcoin, particularly among regulatory-sensitive corporate whale investors.
In this scenario, the bulls could face resistance from the 688,370 addresses that acquired 558,290 BTC at an average price of $65,100. Considering that short-traders stand to lose over $1 billion if prices exceed $65,000, the bears might apply significant pressure to prevent such large-scale liquidations.
