Key Points
- Bitcoin’s price continues to fall despite strong buying interest from retail traders, leading to concerns about further declines.
- Liquidations have increased as Bitcoin struggles to regain momentum, indicating potential increased volatility in future sessions.
Bitcoin’s Price Decline and Retail Sentiment
Bitcoin has been experiencing a continued decrease in price over the past few days, despite retail traders aggressively buying the dip. This has led to a strong contrarian behavior in the market, with prices moving in the opposite direction to the crowd’s expectations. Historically, rebounds occur when retail enthusiasm for dip-buying fades. However, the ongoing trend suggests that optimism among retail investors remains high despite the ongoing drawdown.
Liquidations and Their Impact on Bitcoin’s Market
Data on liquidations reveal that leveraged traders have suffered heavy losses, with significant long liquidations occurring as Bitcoin failed to reclaim key support levels. The latest price drop was worsened by cascading liquidations, which further drove prices lower. On the 25th of February, Bitcoin saw its highest long liquidation in the last five months, with a long liquidation volume of around $559 million and short liquidation volume of around $66 million.
Bitcoin’s Price Trend and Future Outlook
As of this writing, Bitcoin was trading around $85,855, marking a steep drop from recent highs. The price has broken below the $90,000 psychological level, and further downside could see a retest of $80,000. The Moving Average Convergence Divergence (MACD) and the 50-day and 200-day moving averages suggest continued weakness. For a sustainable reversal, retail enthusiasm needs to subside, allowing for a true market reset. If buying pressure from retail traders diminishes, a short-term relief rally could emerge. However, Bitcoin remains vulnerable to further downside before a meaningful recovery takes place. Traders should monitor liquidation levels and retail sentiment trends to gauge when the market might stabilize and reverse its downward trajectory.