Bitcoin experienced a sharp decline on April 2, dropping below $65,800 and resulting in leveraged bull traders facing losses exceeding $130 million. Despite this setback, indicators from the BTC network and key macro indices suggest a potential rebound in the near future.
The sudden drop in Bitcoin price on April 2 saw it plummet to a 10-day low of $65,800, marking a 6% decrease in just a 12-hour period. The question now arises: can BTC bounce back before the upcoming Halving event?
The downward trend in Bitcoin price can be attributed to negative movements in Bitcoin ETFs at the start of the week, with a total outflow of $85.7 million on April 1. Grayscale’s GBTC led the outflows, shedding over $302 million, further contributing to the decline in Bitcoin’s value.
Additionally, rapid liquidations in the derivatives markets accelerated the fall in Bitcoin price. Coinglass’ liquidation heatmap chart illustrates the extent of these liquidations across various assets and timeframes.
As of April 2, more than 140,290 traders had their leveraged positions liquidated, totaling $437.6 million in the past 24 hours. Long traders suffered the most significant losses, with over $133.7 million wiped out.
Despite the bearish impact of these liquidations causing a 6% price drop, the bulls are now motivated to take action to prevent further losses. This could lead to rapid covering purchases by bull traders and profit-taking by short traders, potentially triggering a swift recovery in Bitcoin price without any significant deterioration in network fundamentals.
Recent comments from Fed Chair Jerome Powell have also eased recession fears, hinting at possible rate cuts that could stimulate a quick rebound in Bitcoin price before the Halving event on April 20.
Although Bitcoin’s price has fallen below the 30-day SMA, positive network fundamentals and social sentiment suggest that the recent market downturn is primarily driven by cascading liquidations rather than underlying weaknesses in the BTC ecosystem.
With BTC whales showing resilience amid market fluctuations and strategic retail traders likely to follow suit, there is potential for a bullish recovery in the days ahead. Positive developments in the upcoming Non-Farm Payrolls report could further boost confidence in risk assets markets, paving the way for a bullish phase before the Halving.
Overall, the outlook for Bitcoin price remains optimistic, with the potential for a rebound above $70,000 before the Halving, provided that BTC bulls can prevent further downward movement below the $65,000 level. If key support levels are maintained, Bitcoin could swiftly enter a recovery phase, potentially reaching $75,000 in the near future.