10x Research analysts predict that Bitcoin is on the brink of a significant decline, potentially dropping below $50,000. As of July 4, Bitcoin’s price fell sharply from over $60,000 to $57,000. This decline marks a shift in market sentiment, which the analysts attribute to decreasing buy flows and increasing sell flows.
Source: 10x Research
Markus Thielen, an analyst at 10x Research, emphasized that this downward trend was foreseeable. “Our data from early June already hinted at an overbought market ripe for correction,” Thielen stated. The breaking of the $60,000 psychological benchmark signals a potential further decline to $50,000, suggesting the beginning of a more extensive market correction.
Impact on Investors
The sudden 5.44% drop in Bitcoin’s price has significantly impacted investor sentiment and market liquidity. The decline is reflected in Bitcoin’s $1.1 billion market capitalization and a 57% increase in trading volume. According to the 10x Research report, breaking the key level for Bitcoin miners and spot Bitcoin ETF buyers could accelerate the price decline as sellers scramble to find liquidity.
10x Research report analysis chart depicting a “Double Top Formation” for the Bitcoin price since December 2023. Source: 10x Research
The sell-off coincides with the anticipated Mt. Gox repayments of $8.5 billion worth of Bitcoin, which were set to begin in July. The report also notes that only ill-informed traders are willing to buy at the current levels, suggesting further downward pressure.
Market Outlook and Long-Term Holder Behavior
The 10x Research report advises traders to prioritize risk management in preparation for continued volatility. “We warned that this was not the time to be complacent,” the report states, maintaining a cautious outlook for Bitcoin’s price.
Source: CryptoQuant
Recent analysis from IT Tech indicates that the downward trend is partly due to long-term holders cashing in on substantial profits. 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. Long-term Bitcoin holders, who typically retain their holdings for roughly five to seven years, have contributed to the current selling pressure in the market.
As Bitcoin faces potential further declines, market analysts and investors alike are closely monitoring the situation. The current trends highlight the importance of cautious trading and robust risk management strategies in navigating the volatile cryptocurrency market.
