- Bitcoin is going through a phase of rebuilding market confidence after a major sell-off and leverage wipeout.
- Experts disagree about whether the market has reached a bottom, signaling uncertainty about what comes next.
- The recent downturn was linked to excess leverage and low liquidity rather than fundamental changes to Bitcoin’s value.
- Market recovery will depend on positive economic conditions and renewed interest from large institutional investors.
- Ongoing uncertainty around global trade and economic factors may keep market conditions unstable for now.
Bitcoin faces a cautious period as it attempts to regain stability following a significant market downturn last week. The cryptocurrency experienced a sharp decline after a $19 billion leverage flush and reduced demand for exchange-traded funds (ETFs). This has left market participants waiting for the next move, as there is little conviction about a quick rebound.
Thiago Duarte, a market analyst at Axi, stated that the recent sell-off was driven by a structural issue that was intensified by high leverage and thin liquidity. According to analysts, the rapid correction removed excess speculation rather than indicating a wider retreat from Bitcoin.
The market now sits in a critical price range between $108,400 and $117,100, with over 5% of Bitcoin supply currently held at a loss. If prices fail to rise above $117,100, analysts from Glassnode warned in a recent report that the risk of “structural weakness” and a deeper correction increases.
“The crypto market is still in a confidence-rebuilding and bottom-forming phase,” said Tim Sun, senior researcher at HashKey Group. He added that “the duration of this stage largely depends on macro conditions,” pointing to unresolved trade tensions and tight global liquidity, which both weigh on the market.
Some long-term holders have sold off about 300,000 Bitcoin, which analysts describe as a sign of profit-taking. Sun also noted that market sentiment is highly sensitive to news and that institutional inflows might slow temporarily after the recent reduction in leverage.
A recent note from K33 Research suggested that these kinds of leveraged sell-offs have matched market bottoms in the past. The organization pointed out that the basic setup for a recovery is stable, with supportive policies, high institutional demand, and potential ETF developments.
Robin Singh, CEO at Koinly, said in a statement that if risk sentiment improves, Bitcoin could quickly test the higher end of its current range. However, ongoing concerns about U.S. inflation and trade policies may keep prices volatile in the near future. Glassnode analysts said a sustainable rebound will depend on the return of ETF buying and new accumulation of coins by investors.
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