The pain may not be over yet for Bitcoin investors, according to one crypto analyst, arguing that there’s still more leverage that could be flushed out.
Crypto analyst James Check described the recent market meltdown as a “2-sigma long liquidation event,” which wiped out a “chunk of degen gamblers.”
Most of the leverage is gone, but the market “has an incredible nose that can sniff out the final hold-outs,” he added, cautioning that a further flush out could be on the cards.
A 2-sigma liquidation event in crypto refers to a significant market movement that triggers mass liquidations of leveraged positions, with “2-sigma,” or two standard deviations, indicating the statistical magnitude of the price swing.
Bitcoin shed over $24,000 in just 10 days, dropping to a seven-month low of around $82,000 on Nov. 21.
Graph of Bitcoin’s 2-sigma liquidation event. Source: James CheckBitcoin has found a local bottom
The crypto markets showed tentative signs of stabilization after last week’s dramatic sell-off, and may have found a local bottom, Augustine Fan, head of insights at crypto trading software service provider SignalPlus, told Cointelegraph.
“Markets are currently so oversold from both sentiment and technical perspectives (such as Bollinger Bands), and prices are likely to have seen local lows for now, absent any new exogenous factors (such as DAT forced selling),” he said.
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Fan expects prices to range between $82,000 and $92,000 and identified the next significant price support around the $78,000 area.
Bitcoin whales are still distributing BTC
Analysts at blockchain data provider CryptoQuant identified a local bottom that could lead to a more sustained rebound.
“On-chain data shows a market shaped by institutional redistribution, structural weakness, and a rebound that may signal a local bottom,” said analyst Carmelo Alemán on Tuesday.
However, the crucial 1,000 to 10,000 BTC whale cohort is still selling, which prevents a full confirmation of the trend reversal, he added.
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Source: https://cointelegraph.com/news/analyst-warns-more-leverage-liquidations-could-push-btc-below-80k?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
