Potential Bearish Trends in Bitcoin and Cryptocurrency Market
Recent actions in the crypto market have seen Bitcoin facing a 4% decline, dropping below the $56,000 mark. This setback has reversed the Saturday recovery and dragged the entire crypto market into a bearish territory.
The surge in coin supply has further aggravated the situation, leading to a decline during early Asian trading hours on Monday. Presently, Bitcoin is valued at $55,269, showing a 1.30% intraday loss with a low point at $54,296. This bearish tone has triggered long liquidations in altcoins, causing prominent cryptocurrencies to slide by 5% or more.
Leading cryptocurrencies like Ethereum, Solana, and Toncoin witnessed declines of 5.25%, 7.23%, and 5.45% respectively. Meme coins such as DOGE, SHIB, and PEPE were hit even harder, experiencing drops of 8.08%, 7.64%, and 12.84% respectively.
As pessimism looms over the crypto market with the start of the week, concerns grow regarding a potential major crash in the near future. Delving into a detailed price analysis of top cryptocurrencies can provide insights into the market's current scenario.
Overview of Bitcoin's Price Performance
Bitcoin's price continues to decline without any follow-up to the Saturday recovery. Falling below $56,000, Bitcoin is currently priced at $55,269, marking a nearly 5% decrease in the last 24 hours.
The daily chart reflects an increase in bearish momentum as Bitcoin's price breaks below the descending trendline. The 4% drop on Sunday formed a bearish engulfing candle, signaling a resurgence of the bearish trend.
The substantial long liquidations totaling $111 million on Sunday and an additional $75 million at the beginning of Monday reinforce the bearish sentiment prevailing in the market.
Analysis of Bitcoin Hashrate Drawdown
The decline in Bitcoin's hashrate, measuring mining activity, has reached critical levels according to Cryptoquant, reminiscent of figures last observed in December 2022.
Past instances reveal that significant hashrate drawdowns usually precede notable price movements. The ongoing drawdown heightens the likelihood of a significant price shift shortly.
Although the deep hashrate drawdown could signal a bottoming process or the initiation of a bullish phase, the current price action contradicts this narrative as Bitcoin's price slips below the $56,000 threshold.
Impact of Mt. Gox Payout on Market Dynamics
The recent payout scheme initiated following the collapse of the Mt. Gox crypto exchange in 2014 has instilled fear among market participants. The commencement of the repayment process, after a prolonged wait, raises concerns about a potential surge in supply in the market.
Mt. Gox creditors are set to receive either Bitcoin (BTC) or Bitcoin Cash (BCH) within the next 2 weeks to 3 months, depending on the chosen exchange. The anticipated distribution of approximately $2.71 billion in BTC through this process threatens market stability.
Market Outlook for Bitcoin and Cryptocurrencies
Amidst the prevailing atmosphere of fear, uncertainty, and doubt (FUD) in the crypto sector, downward trends are expected to persist in the coming week. With Bitcoin breaching the $56,000 level, the next critical support level lies at $52,000.
The downtrend increases the likelihood of a death cross between the 50-day and 200-day exponential moving averages (EMAs), signaling further potential declines. Consequently, altcoins may witness pronounced liquidations and substantial sell-offs in the upcoming period.
