Cryptocurrency analysts are expressing caution about Bitcoin‘s BTC/USD near-term price action, pointing to continued government sell-offs, market liquidity issues and the uncertainty surrounding the altcoin market as bearish factors.
What Happened: Pseudonymous analyst Altcoin Sherpa indicated lack of buying pressure, cautioning about selling pressure due to the government’s ongoing Bitcoin liquidation.
He also warned that overleveraged traders could face substantial losses if Bitcoin drops below the $90,000 level, leading to potential wicks down to the mid-low $80,000s in specific scenarios.
According to Sherpa, absorption of the sell-off isn’t assured, meaning Bitcoin faces a precarious situation.
Analyst Kevin supported Sherpa’s analysis, pointing out that the monthly liquidity heat map shows a significant amount of long liquidity cleared out.
Still, there remains a “pretty heavy block of liquidity” down to the $89,000-$90,000 level, with the potential for a solid bounce if those levels are reached.
Kevin highlighted a critical test for the altcoin market, suggesting that the total market cap of altcoins is currently testing its daily super trend and 100-day exponential moving average on the daily timeframe for the second time in a month.
According to Kevin, if history is any indication, losing this support level during a bull market often leads to significant drawdowns, which makes this area incredibly important for the market’s health.
He also noted that the current moment will determine if the cryptocurrency market still operates in a cyclical nature, or if past performance was influenced solely by loose monetary policy.
Also Read: Bitcoin Silk Road Sales Would Affect Leverage Traders More Than Holders, Analyst Argues
Why It Matters: Both experts are raising serious concerns about the immediate future of the market, with potential for heavy losses for the highly leveraged traders, and also major drawdowns in the altcoin market if critical support levels break.
At the time of writing, Bitcoin is trading down about 0.2% over the last 24 hours at $94,220.
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