Analyst Warns of Potential Bitcoin Bear Market Return, Cites Key Support Level

Despite the recent bullish sentiment surrounding Bitcoin, on-chain analysts and market indicators suggest that the world’s largest cryptocurrency could be facing a potential return to bearish conditions.

Will Woo, a prominent on-chain analyst, has warned that a move back to the bear market is possible, with a decline below the $58,900 Short-Term Holder support level potentially invalidating bullish theses.

TLDR

On-chain analyst Will Woo suggests that a move back to the bear market is possible for Bitcoin, with a potential decline below the $58,900 Short-Term Holder support level invalidating bullish theses.
The liquidation heatmap indicates that Bitcoin might move toward $66,638, with potential liquidations of $7.18 million worth of contracts, while a drop to $64,580 could wipe out $29.17 million in open positions on Binance.
Bitcoin’s NVT ratio suggests that the price could be overvalued for the current market condition, potentially leading to another correction.
CoinDesk’s Bitcoin Trend Indicator has turned neutral from bullish, signaling a weakening of upside momentum, while Ether’s trend indicator has also hit neutral.
Analyst Markus Thielen has turned bearish on risk assets, citing rising Treasury yields and dwindling odds of Fed rate cuts as the primary triggers for a potential price correction in stocks and cryptocycles.

Woo’s concerns are further supported by the liquidation heatmap, which indicates that Bitcoin might move toward $66,638, potentially leading to the liquidation of $7.18 million worth of contracts. If BTC drops further, the next area of interest would be $64,580, where open positions worth $29.17 million could be wiped out on Binance alone. To confirm this bearish phase, Bitcoin would need to flush out long leverage positions down to $60,000.

Here’s how the markets look to me.

$58.9k STH support, if this breaks we move to a bear market.

CVD selloff has peaked, so a phase of “up” next. CVD measures market orders (impatient buy/sells).

Longer term: still weeks away from a proper bullish environment. pic.twitter.com/NxVwSA4KtT

— Willy Woo (@woonomic) April 15, 2024

Adding to the bearish sentiment, Bitcoin’s Network Value to Transactions (NVT) ratio has moved higher, suggesting that the price could be overvalued for the current market condition. If the NVT ratio remains high in the coming days, Bitcoin’s price might undergo another correction.

CoinDesk’s Bitcoin Trend Indicator (BTI) has also flipped to neutral from bullish, signaling a weakening of upside momentum. The BTI, which communicates the direction and strength of Bitcoin’s price trends through a purpose-built algorithm, has been in an uptrend or significant uptrend zone since October 2023. Ether’s trend indicator has also hit neutral, further indicating a potential shift in market sentiment.

Markus Thielen, founder of 10X Research and the analyst who predicted Bitcoin’s bottom in November 2022 and the recent pre-halving surge to record highs, has turned bearish on risk assets, including technology stocks and cryptocurrencies. Thielen cites the unexpected and persistent inflation, rising Treasury yields, and dwindling odds of Fed rate cuts as the primary triggers for a potential price correction in stocks and crypto.

As the Bitcoin network’s mining reward halving approaches on April 20, some observers expect the correction to gather pace once the hype surrounding the event fades. The halving will reduce the per-block coin emission to 3.125 BTC from 6.25 BTC, effectively halving the pace of supply expansion.

While Bitcoin currently trades at $62,600, representing a 42% year-to-date gain, the emerging bearish signals from on-chain analysts and market indicators suggest that investors should remain cautious over the coming weeks.