Bitcoin is currently resetting essential metrics as the price drop eliminates leverage in the market. The BTC/USD pair is hovering around $66,000 after dropping 5% in a single hour. Despite a 7% decline in April, the market is experiencing a retest of support levels which is helping to cool off the overheated conditions.

The recent drop in prices led to a significant liquidation event totaling $400 million for Bitcoin and other cryptocurrencies. Consequently, funding rates began to turn negative, indicating a shift in market sentiment.

According to experts, the drop in prices and funding rates is necessary to eliminate leverage in the market before true price discovery can occur. The Bitcoin Relative Strength Index (RSI) is now back at the pivotal 50 midpoint on daily timeframes, which is an important level to monitor during uptrends.

In addition, the Bollinger Bands on daily timeframes are signaling a potential pre-breakout phase for BTC/USD. Analysts are drawing comparisons to previous market movements, with the bands tightening to levels not seen since the price rise from $45,000.

This market update is provided for informational purposes only and does not constitute investment advice. Readers are advised to conduct their own research before making any investment decisions.