Is Bitcoin price going to crash again?
After hitting new all-time highs, Bitcoin hints at early signs of short-term correction to reset its overleveraged futures market.
Bitcoin’s price dropped 6% between Nov. 13 and 15, exhibiting its first period of correction since breaking above its previous all-time high of $73,880.
With BTC undergoing price discovery on Nov. 6, the bullish momentum could be sustained if prices remain above $85,000 on the daily chart.
Bitcoin bulls eye liquidity sweep at $85,000
Despite Bitcoin’s recent decline, it maintained a higher high and higher low pattern across both short-term and long-term hourly charts. BTC has sustained a bullish position above 50-day, 100-day and 200-day EMA levels on the 1-hour chart since Nov. 5.
For bullish continuation, the ideal scenario would be for Bitcoin to exhibit a liquidity sweep around its recent higher low in the $85,500 range.
Bluntz, an independent analyst, mentioned a similar pathway for BTC, indicating that Bitcoin’s current pullback into the $87,000 range is its final low before hitting the elusive $100,000 level.
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Overleveraged markets can trigger deeper BTC liquidations
If Bitcoin cannot maintain a daily close above $85,000, the bearish spectrums slightly widen since the futures market has displayed significant overleveraged positions.
CryptoQuant CEO Ki-Young Ju reiterated on Nov. 13 that the estimated futures leverage ratio for the Bitcoin/USDT perpetual market remains at a new high of 270% over its previous top from May 2024.
Additionally, Bitcoin open interest levels are also around its all-time high range, which means more leveraged positions are open at the moment than ever in BTC’s history.
Another fundamental dilemma with a price discovery phase is that spot order books are extremely thin above $73,884. Bitcoin has been above this price range for less than 10 days; hence, there is a lack of support and resistance around BTC’s current price.
Data from CoinGlass highlighted that the largest immediate liquidation range remains near $85,750, where over $127 million in leveraged positions will be wiped out. Thus, a strong case can be made for a liquidity sweep of the $85,000 lows.
Coinbase premium declined by 88% on Nov. 14
After Donald Trump’s US presidential election win on Nov. 6, the Coinbase premium index jumped to its highest level since April 2024 within 24 hours. A rising premium represented buying pressure from the US retail investors, and the index progressively rose as Bitcoin reached a new all-time high.
However, on Nov. 14, the premium dropped 88%, which indicated that some investors are beginning to take minor profits or that the initial spot bidding is fading out.
Byzantine General, a Bitcoin futures market analyst, also mentioned that Coinbase and Kraken spot bids continue to dictate a bullish pulse. When spot bids on these exchanges slow down, Bitcoin also exhibits a correction.
