Collapse or Rebound at $70,000? Bitcoin Reaches a Turning Point

▲ Bitcoin (BTC)/AI Generated Image ©

The sharp drop in Bitcoin in just one day is analyzed to be due to the simultaneous impact of excessive leverage liquidation and geopolitical risks.

According to CoinMarketCap, a cryptocurrency market aggregation site, on April 13 (local time), Bitcoin (BTC) fell by 3.39% over the past 24 hours, dropping to the $70,901 level. The total cryptocurrency market capitalization also decreased by nearly 3%, indicating a widespread market decline.

The direct cause of this decline is the large-scale liquidation of long positions. Approximately $76.74 million worth of Bitcoin liquidations occurred, with 91% of them being long positions. As excessively accumulated bullish bets collapsed all at once, forced selling occurred in a chain reaction, acting as a trigger to accelerate the short-term price drop.

In addition, escalating tensions between the United States and Iran significantly dampened investor sentiment. Amid military tensions surrounding the Strait of Hormuz, the market shifted to a typical risk-off trend, and Bitcoin moved like a risk asset, showing a high correlation of 94% with the S&P500 over the past week.

Technically, the burden has also increased. Bitcoin broke below the Fibonacci 38.2% support level near $72,589, and the $71,325 range has now emerged as a critical defense line. If this level holds, an attempt to rebound to $72,220 is possible, but if it breaks, the possibility of testing $70,000 opens up.

In the short term, the market's direction depends on two variables. One is the discussion regarding the U.S. cryptocurrency market structure bill, the Clarity Act, scheduled by the U.S. Securities and Exchange Commission (SEC) on April 16, and the other is the inflow of spot buying pressure. The current rapid shift of funding rates to negative indicates extreme bearish sentiment, but also implies the possibility of a short squeeze upon a rebound, suggesting continued periods of increased volatility.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*