Key Points
- Bitcoin’s market has undergone a significant reset with over $10 billion in open interest lost in two months.
- Despite the decline, Bitcoin’s long-term outlook remains optimistic with potential for price recovery.
Bitcoin’s market has recently experienced a significant reset, with a loss of over $10 billion in open interest within a span of two months. This has led many market analysts to anticipate a recovery in Bitcoin’s price.
Market Reset and Price Recovery
The peak of Bitcoin’s open interest was recorded on January 17, hitting a record $33 billion. This indicated an extreme level of leverage in the market. However, political uncertainty related to actions of the former U.S. President Donald Trump resulted in a wave of liquidations.
Between February 20 and March 4, nearly $10 billion in open interest disappeared. This sharp fall drove Bitcoin’s 90-day futures open interest change down to -14%, often an indication of market resets before price recoveries. It is believed that these stages, which eliminate excessive speculation, provide a more stable basis for future growth.
Optimistic Long-Term Outlook
Despite the decline, Bitcoin’s long-term outlook remains positive. Economist Timothy Peterson suggests that Bitcoin usually experiences the largest seasonal gains in April and October. His recent analysis indicates that Bitcoin could reach new all-time highs before June, with a median target of $126,000.
Peterson’s “Lowest Price Forward” model, which estimates a price level that Bitcoin is unlikely to fall below in future trading, suggests that Bitcoin’s price floor has now risen to $69,000, with a 95% probability of holding. Previous bull markets have shown that corrections like Bitcoin’s recent 30% pullback often precede strong rebounds.
However, not all analysts share this bullish view. Benjamin Cowen, founder of Into The Cryptoverse, warned that Bitcoin’s bull cycle could be at risk if it falls below the 2024 highs, which are in the lower $70,000s. According to Cowen, if Bitcoin closes in the low $60,000s, the bull market might be over. But maintaining above $70,000-$73,000 would preserve the market’s structure.
At the time of writing, Bitcoin is in a crucial consolidation phase, with its current price at $82,900. If past trends are any indication, this reset could set the stage for another strong rally in the coming months.