Site iconSite icon ForkLog

Bitcoin’s Retreat from New Highs Seen as ‘Healthy Consolidation’ by Experts

ForkLog
Bitcoin's Retreat from New Highs Seen as 'Healthy Consolidation' by Experts
  • Open interest in bitcoin derivatives dropped by $1.42 billion (-12%).
  • The sharp correction triggered new purchases of medium-term futures.
  • Experts do not anticipate a break in the positive trend.

The achievement of a new all-time high by digital gold triggered a wave of selling, exacerbated by liquidations in the perpetual contracts market, according to Bloomberg.

“We always see a wave of forced position closures with new record highs,” commented COO of MNNC Group, Ayesha Kiani.

Reason — High Leverage

The agency highlighted the boom-bust nature of the first cryptocurrency, noting previous cycles characterized by triple-digit growth followed by double-digit declines in capitalization. Following the approval of an ETF in January, bitcoin rose by more than 60%.

According to Coinglass, on March 5, the volume of forcibly closed long positions in perpetual contracts reached $244 million. Prior to this, open interest (OI) had risen to a record $30 billion. The annualized funding rate for longs reached an impressive 100%.

Data: CoinGlass.

“Derivative market parameters indicated increased speculative sentiment. This made the market vulnerable to short-term deleveraging of positions,” stated Spencer Hallarn, Global Head of OTC Trading at GSR.

According to Santiment, the correction resulted in a $1.42 billion (-12%) drop in bitcoin contract OI.

Senior Analyst at K33 Research, Vetle Lunde, urged caution with leverage, as excessive fluctuations could lead to liquidations before reaching the intended price target.

On March 5, after rising to $69,000, the price fell to $59,000 within five hours. It later recovered to $67,000.

5-minute BTC/USDT chart on Binance. Data: TradingView.

Correction as a Buying Opportunity

Analysts surveyed by the agency expressed confidence in the long-term upward trend of bitcoin, partly due to the excitement surrounding ETFs.

According to Hashnote founder and CEO Leo Mizuhara, digital gold will rise to at least $138,000—twice the last ATH. The expert based his position on historical observations—after reaching record levels, the next all-time high was four to five times higher.

QCP Capital noted that the deleveraging drop (with liquidation volumes on Binance alone reaching $1 billion) subsequently led to aggressive buying of call options expiring in September-December.

Head of Research at Galaxy Research, Alex Thorn, drew an analogy with December 2020, when the price briefly retreated after reaching new record highs.

“Back then, the price twice reached its previous ATH of ~$20,000, then fluctuated and traded 11.3% lower over 15 days before definitively breaking that level. It might look similar now. Some consolidation would be beneficial after a 62% increase since the start of the year and a 77% rise from the year’s low (January 23),” the specialist noted.

Technical analyst and head of Factor LLC, Peter Brandt, presented a chart showing bitcoin’s movement within a broad ascending channel with short-term support at its median line.

“A dip below $55,000 would be a buying opportunity, although such a move is not my forecast,” the expert indicated.

Earlier, CIO of Bitwise, Matt Hougan, predicted bitcoin would exceed $80,000 in the foreseeable future due to ETF success.

Pantera Capital forecasted a rise in digital gold’s value to $147,000 by 2025.

According to JPMorgan, the upcoming halving in April could trigger a sharp price drop for the first cryptocurrency.

Previously, Matrixport co-founder Daniel Yan predicted a “healthy” market correction of approximately 15%.

Exit mobile version