Bitcoin traders set a $50K price target after BTC fell below a key support level.
Bitcoin (BTC) price fell 5.42% in the last 24 hours to hit a new multi-week low of $57,151 on May 1st. On-chain data suggests that a slowdown in Bitcoin demand growth and an increase in open short positions may be responsible for the latest. drawdown, and new lows may be in store for BTC.
Reporting from CryptoQuant suggests that BTC's recent decline reflects a slowdown in demand due to a slowdown in Bitcoin balance growth among fixed-income holders, a slowdown in demand for Bitcoin ETFs, and an increase in short positions in the futures market.
According to CryptoQuant data, the demand for permanent holders (investors who only buy and never sell bitcoins) fell by 50% in April, from 200,000 BTC to 90,000 BTC at the end of March.
“There needs to be an acceleration of demand growth so that prices can come down and eventually rally at higher levels.”
The chart above shows that this metric “has seen a meaningful correction since Bitcoin reached the same level as in early March, falling 7% after breaching its all-time high.
Whale interest has been waning since late March, and according to CryptoQuant analysts, BTC price corrections often stem from slower growth in interest from large investors.
“Bitcoin whale demand growth (purple area) reached a monthly growth rate of 12% at the end of March and has now decreased to 6%.”
The analysts said the slowdown in Bitcoin demand was due to reduced buying of spot ETFs in the US, adding to sell-side pressure.
After peaking at over $1 billion in mid-March, daily purchases of bitcoin from ETFs are currently down to zero. “
Another metric used by data analytics firm On-Chain to explain the slowdown in Bitcoin demand is “traders' reluctance to pay more to open long positions as sell orders outnumber buy orders.”
Bitcoin's funding rate has dropped year-on-year, indicating that traders are unwilling to “pay as much as before to open long positions.”
Instead, “the recent decline in prices was caused by traders opening short positions in anticipation of further price declines,” the report said.
Analysts agree that the downside is the likely direction for Bitcoin's price.
The ongoing market correction has market participants wondering how low the price of Bitcoin can go before a trend reversal occurs.
CryptoQuant analysts set the lower target in the $55,000 to $57,000 interest zone. Traders' price base is known to support prices during bull markets.
The current price of Bitcoin is below the price of traders.
According to famous analyst Scott Melker, the price of BTC may go as low as $52,000 in the short term. The correction is still easy for a bull market as the day's RSI is not yet oversold, Melker said.
“This is still only a 23% correction, very shallow for a bull market and consistent with other corrections on this run. We have yet to see a 30-40% pullback like in the past during this bull market.”
Next, Bitcoin analyst Tur Demeister sees BTC trading at $60,409, saying $50,000 could be the next stop for Bitcoin due to the loss of $60,000 support.
According to trader and analyst Mags, if Bitcoin closes below $60,000 in the weekly timeframe, traders should “expect a deeper correction to $40,000 and below.”
“We've seen 4 pullbacks between 20-22% so far this cycle. If we see the same, a -22% correction from the local highs will take us to $58,000 – $57,500.”
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
