Bitcoin’s market trajectory is expected to take a severe downturn, with 10x Research forecasting a drop below $57,000, potentially plummeting further to $50,000. This stark prediction comes in the wake of Bitcoin’s dip from over $60,000 on July 4, signaling a pivotal shift in market dynamics.

Market Sentiment Shift

The breach of the psychological $60,000 barrier, descending toward $50,000, underscores a notable change in market sentiment. According to 10x Research, this shift is attributed to a significant decrease in buying activity coupled with an increase in selling pressure. Markus Thielen, the founder of 10x Research, noted the inevitability of this decline, stating:

“Our data from early June already indicated an overbought market primed for correction.”

Investor Implications

The abrupt 5.44% drop in Bitcoin’s price has had a profound impact on investor sentiment and market liquidity. This decline is reflected in Bitcoin’s $1.1 billion market capitalization and a 57% surge in trading volume. The 10x Research report highlighted that breaking the “key level for Bitcoin miners and spot Bitcoin ETF buyers” could lead to an accelerated price decline as support levels crumble and sellers rush to liquidate.

Thielen, speaking with Cointelegraph, emphasized that most crypto traders tend to have a long bias, but prices often fall once the last buyer has acted, prompting a shift in market narrative.

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“Following the failed breakout on June 8, some of our trading models turned bearish on June 12 based on pattern analysis. Although we prefer higher Bitcoin prices, the recent loss in momentum could significantly delay the rally’s restart.”

Influencing Factors

The sell-off coincides with the anticipated Mt. Gox repayments of $8.5 billion worth of Bitcoin, scheduled to begin in July. Thielen explained that the Bitcoin rally in late May and June was driven by expectations of SEC approval for the ETH ETF. However, over-positioning led to the recent correction.

“In mid-June, several Bitcoin signals indicated a potential price correction. Recognizing shifts in macro variables like growth, liquidity, and inflation is crucial for crypto markets. Bitcoin may drop back to $50,000, with a potential further decline to $45,000.”

Long-Term Holder Impact

On July 3, the spent output profit ratio (SOPR) from long-term holders exceeded a value of 10, indicating that Bitcoin was sold for at least ten times the initial purchase price. This selling pressure from long-term holders, who typically retain their assets for five to seven years, has further contributed to the current market downturn.

Thielen concluded by cautioning that only ill-informed traders are buying at these levels, given the broken $60,000 support.

By monitoring these market signals and understanding macroeconomic shifts, investors can better navigate the volatile landscape of cryptocurrency markets. The potential drop to $50,000, and possibly further to $45,000, underscores the importance of staying informed and vigilant in this ever-evolving market.