Bitcoin price fell 5% within the 24-hour timeframe on March 20, hitting a 14-day low of $60,761 critical market data trends suggests more downside could follow.
Bitcoin price continues to face bearish headwinds as short-traders seize control of the BTC derivatives markets ahead of the upcoming US Fed. rate announcement
Is BTC price on the brink of a major reversal below $60,000?
Bitcoin short traders seize control of the derivatives markets
Bitcoin price has been stuck in a downward spiral since rejecting at the $73,840 all time-high recorded on March 14. Market demand has flattened as investors await the upcoming rates Fed rate announcement, scheduled for 2pm Eastern time (ET) on March 20 before making major moves.
With higher-than-expected inflation data released for last month, BTC short traders have piled on leveraged positions in the past week, anticipating that another rate increase could trigger further price downswings.
Coinglass’ liquidation map shows the amount of leverage that traders have applied on their speculative positions around the 10% boundaries of the current prices.
With less than 24 hours to the Fed meeting, BTC leveraged short trades are currently looming twice as high as the value of longs.
The chart above shows that short traders have mounted leveraged positions (green area) worth over $2.43 billion with the 10% boundaries of the current prices, far exceeding the long leverage contracts which currently stands at $943 million, at the time of writing on March 20.
Following the money, this effectively implies that majority of traders are anticipating that next rate announcement will trigger more BTC price dip in the days ahead.
Bitcoin price forecast: Losing $60,000 support could catalyze more losses
At the time of writing on March 20, Bitcoin is currently exchanging hands around $62,000.
Drawing insights from the liquidation charts above, the bulls now face over $641 million in liquidations if BTC price drops below the $60,000 mark. Without sufficient hedge or covering spot purchases, that could set-off more cascading losses.
However, historical accumulation trends offer a glimmer of hope. IntoTheBlock’s in/out of the money chart shows that the $60,000 – $61,900 area has been a major accumulation zone among existing Bitcoin holders in the past.
As seen below, over 495,430 investors, has acquired 338,320 BTC at the average price of $60,948. Considering the traders’ historical tendency to buy more BTC at that price range, another wave of demand could prevent a dip below $60,000.
But if that key support level caves, BTC price could tumble toward $55,500 mark before finding a more significant demand cluster.
On the upside, if the Fed hints at sooner-than-expected rate cuts, it could spur demand for Bitcoin, especially among regulatory-sensitive corporate whale investors.
In this scenario, the bulls could face instant resistance from the 688,370 addresses that acquired 558,290 BTC at the average price of $65,100 mark. And considering the short-traders stand to lose over $1 billion if prices rise above that $65,000, the bears could mount intense pressure to avoid such large volumes of liquidations.
