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05 October, 2024

Bitcoin Price Rebound: Is the Worst Over?

05 October, 2024

Bitcoin May Have Found a Bottom, Says Analyst

CryptoQuant analyst ‘caueconomy’ believes Bitcoin (BTC) might have reached a local bottom, citing a significant liquidation event as a key indicator. While the analyst acknowledged a period of bearish sentiment and technical signals suggesting further decline, emerging signs point to potential price stabilization.

Caueconomy’s CryptoQuant QuickTake post titled \”Liquidation of long positions may have established a local bottom\” delves into the impact of long-position liquidations in the futures market on Bitcoin’s price. The analyst explains that large price drops often trigger substantial reductions in long contracts bought on future exchanges due to mass liquidations. This process decreases the selling pressure, potentially paving the way for a short-term price recovery.

On October 1st, over 4,000 BTC long positions were liquidated, representing the second-largest liquidation event of 2024 according to CryptoQuant data. Caueconomy believes these significant liquidations often signal potential market reversals or local bottoms as the selling pressure is removed. However, the analyst emphasizes the importance of monitoring buying strength to assess whether it can offset the decline and facilitate a recovery.

Signs of Buying Interest

Bitcoin has exhibited a gradual price rebound, registering a 3.5% increase in the past day to reclaim the $62,000 mark. This increase has been reflected in the broader crypto market, with the global crypto market cap rising by 2% in the past day to a current valuation of 2.26 trillion.

Renowned crypto analyst Ali, known on X (formerly Twitter), reported a surge in Bitcoin buying interest on the OKX exchange. Ali highlighted a spike in the Taker Buy/Sell Ratio on OKX, indicating aggressive buying activity. This behavior often reflects increased buyer confidence, hinting at the possibility of a price recovery or a new upward trend.

Cautious Optimism

While the signs are encouraging, caueconomy advises remaining cautious. The analyst believes the current price range might be sustained in the short term, but a sustained upward movement hinges on renewed buying interest and market activity. The analyst concludes, \”At this point, the price is likely to sustain the current range in the short term, but it will be necessary to watch the buying strength to be able to recover the decline.\”

The crypto market remains volatile, and Bitcoin’s future direction remains uncertain. However, the recent signs of buying interest and the significant liquidation event offer a glimmer of hope for a potential rebound in the near future.