The collapse in the price of bitcoin has destroyed liquidity levels going all the way back to 2020. After the crypto industry had a high-profile liquidity issue hitting the FTX exchange, the market took a hit. As a result, the leading cryptocurrency has now corrected to a two-year low, leaving bulls looking hopeless.
The cryptocurrency market itself is in free fall, with various altcoins including Ripple, Ethereum and Binance down more than 15%. Bitcoin price started a declining trend and even traded below the $16,000 support level. The price recently declined as low as $15,555 and is now extending losses. If the recovery wave does not form above the $16,500 level, bitcoin could continue to decline.
Technicals take a hit
At the time of writing, the price of one Bitcoin is $16,274 and the last 24 hours of the dramatic fall saw long liquidations of 679,000,000 dollars. BTC is currently trading at levels last seen in 2020, just before the epic bull run.
The Volume Profile Index indicated fewer transactions during the current sell-off than during the liquidations following the US midterm elections. This could be a subliminal sign that the recession is looming. If the downside continues, the next target would be the 2020 liquidity level between $15,000 and possibly $14,500.
If the bulls are able to break through the $17,900 swing high, the bearish argument may become invalidated. By doing this, a surge toward $21,500 might take place. The price of Bitcoin would rise by 35% as a result of this action.
However, the technical aspects of bitcoin are also negative now. A breakdown of the one-day technical, in particular, signals a “strong sell” at 16, as does the moving average at 14. Oscillators are also considered to “sell” somewhere on the two.
