Greed

Plunge

bullish

Bitcoin

when

<h2 id="key-points">Key Points</h2> 
<ul> 
 <li>Bitcoin’s leverage ratio and Open Interest could be impeding its progress, with a potential fall to $56k.</li> 
 <li>The derivatives market may be overheated, with increased risks from leverage trading.</li> 
</ul> 
<p> Bitcoin (BTC) has recently slipped below the 200-day simple moving average, trading between the $60k-$60.5k support zone. </p> 
<p> However, there is a significant possibility of a further drop to $56k or even lower. </p> 
<h2 id="market-sentiment-and-potential-bottom">Market Sentiment and Potential Bottom</h2> 
<p>According to CoinMarketCap, the Crypto Fear and Greed index stands at 48, indicating a bearish market sentiment. </p> 
<p> Traders might be lured into margin trading to recoup losses, a strategy that could lead to significant losses. </p> 
<p> Crypto analyst Axel Adler suggests that the bottom may be near, based on the historical price crashes since May 2023 that have seen drawdowns from 17% to 23%. </p> 
<p> The current figure stands at 16.4%, suggesting that the bottom might be close. </p> 
<h2 id="the-role-of-the-derivatives-market">The Role of the Derivatives Market</h2> 
<p>The $70k level, near the all-time high for Bitcoin, has not been convincingly surpassed since March. </p> 
<p> During this period, the Open Interest has remained in the $30 billion to $35 billion range. </p> 
<p> The past week saw a decrease by $4 billion, reflecting a bearish short-term sentiment. </p> 
<p> A successful bull run requires high spot demand and when the futures market becomes too heated, price volatility can reset the upward trajectory. </p> 
<p> The estimated leverage ratio has been on the rise since June, indicating that investors are taking more risks with leverage trading, possibly in anticipation of a bullish breakout. </p> 
<p> This could negatively impact the chances of a breakout as the price is drawn to the long liquidations levels to the south. </p> 
<p> An earlier report noted that the long-term holder selling pressure has decreased in recent weeks. </p> 
<p> This suggests that the $60k might be the local bottom, but a deeper retracement due to macro events and market-wide panic cannot be ruled out.</p>

Bitcoin Tumbles Close to $60K: Could a Plunge to $56K Be Looming?

Table of Contents

CoinEagle.com

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