Bitcoin Price Downside Risks to $50,000 Surge Per On-chain Indicators

Key Insights:

• Bitcoin price sees weak momentum amid repeated recovery failures above $70,000.
• Analysts projected a possible Bitcoin price bottom between $46,000 and $54,000.
• Spot Bitcoin ETFs recorded $296 million in weekly outflows, ending a four-week inflow streak.

Amid the escalating US-Iran war tensions, the Bitcoin price is seeing some volatility, dropping to $66,000 earlier on March 30. Following the rejection at $70,000, BTC has been heading lower with no new catalyst in cite. On-chain indicators hint at a greater downside risk for the flagship cryptocurrency.

Bitcoin Price Downside Risks Are Rising

According to Bitfinex data, Bitcoin long positions have climbed to 79,343 BTC. According to on-chain indicators, this is the highest level since November 2023. Historically, surges in long positions on Bitfinex have often acted as a contrarian indicator. It often coincides with local price tops or precedes broader crypto market decline.

The latest buildup in leveraged longs comes amid rising macroeconomic uncertainty. As per market observers, it increases the potential downside risks for Bitcoin price if the long positions become overcrowded.

Bitcoin price long positions | Source: TradingView

Market experts like Colin Wu stated that excessive bullish positioning can increase the likelihood of BTC long liquidations. Thus, if the support level fails, Bitcoin price can see even lower levels.

Bitcoin Price Model Suggests Bottom Under $50,000

On-chain analyst Willy Woo has suggested that Bitcoin price could find a potential market bottom between $46,000 and $54,000. The analysis is based on his traditional on-chain valuation models.

Bitcoin price models | Source: Willy Woo

Woo noted that older on-chain indicators, including capital flow metrics, show that capital stored in Bitcoin has been declining since November. It clearly shows signs of weakening market momentum.

The analyst highlighted the “orange line” in his model, which tracks capital accumulation trends and suggests further downside risk. He also pointed to the CVDD Floor Model, which currently sits around $45,500 and gradually increases over time.

According to Woo, this model historically acts as a long-term support level. It indicates a potential bottom range if selling pressure continues.

Crypto analyst Ardi has warned that Bitcoin may be showing signs of weakening market structure after failing to sustain a recovery. According to Ardi, Bitcoin spent several weeks stabilizing within a range. It allows market participants to build a bullish case for a potential breakout.

BTC price tests crucial support | Source: Ardi

However, the analyst noted that the price failed to reclaim higher levels with strong momentum. Instead, the recent bounce lost momentum and reversed, handing control back to sellers. Ardi added that repeated failures to break higher typically signal weak market structure. It raises the chances of a further Bitcoin price correction.

Bitcoin ETF outflows | Source: SoSoValue

Over the past week, spot Bitcoin ETFs saw major outflows totaling $296 million, according to SoSoValue. This marks the end of four weeks of inflows into the Bitcoin investment product. Amid rising geopolitical tensions and crude prices, institutions appear to be withdrawing their funds from the market.

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