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A potential Bitcoin (BTC) price drop to $45,000 is looming, according to a new report from digital asset investment firm 10x Research. Amid rising concerns over market stability, the forecast has rattled investors, fueling fears of further declines in the already volatile cryptocurrency market.
One of the most alarming indicators cited in the 10x Research report is the sharp decline in Bitcoin’s active addresses. After reaching a peak of 1.20 million in November 2023, the number of active addresses plummeted to just 612,000 by mid-2024. This steep drop-off indicates that a significant number of participants have exited the Bitcoin network, which could be a sign of declining interest or confidence in the asset.
Markus Thielen, Head of Research at 10x Research, emphasized this point in the report, stating, “The decline in active addresses is a clear sign that the enthusiasm and participation in Bitcoin have diminished significantly. This reduced activity, coupled with other bearish factors, points to a possible drop in Bitcoin’s price to $45,000.”
The analysis by BeInCrypto supports this view, as their review of the active addresses data aligns with Thielen’s conclusions. The drop in active addresses is often seen as a precursor to reduced market liquidity and can amplify downward price movements.
Adding fuel to the fire is the recent outflow of $1 billion Bitcoin ETF outflows This significant withdrawal of funds is being interpreted by many analysts as a bearish signal for Bitcoin’s price. ETFs are often viewed as a proxy for institutional interest in Bitcoin, and large outflows could indicate a shift in sentiment among big-money investors.
The outflows could also suggest that investors are bracing for a further decline in Bitcoin’s value, as they liquidate positions to avoid potential losses. This sentiment is echoed by several market observers, who pinpointed the weak US economy and ongoing economic uncertainties as additional factors that could drive Bitcoin prices lower.
Another key metric underscoring the potential for a Bitcoin (BTC) price drop is the Mayer Multiple, a tool used to assess the market’s temperature. The Mayer Multiple is calculated by dividing the Bitcoin price by its 200-day moving average. Historically, a Mayer Multiple above 1 signals a bullish market, while a reading below 1 indicates bearish conditions.
As of now, the Mayer Multiple stands at 0.8, well below the crucial threshold of 1. This low reading suggests that Bitcoin is currently in a vulnerable position and could be at risk of a further price decline. Glassnode, a blockchain analytics firm, has pointed out that Bitcoin’s price is also trading below its 200-day Exponential Moving Average (EMA), which historically has been a strong indicator of bearish momentum.
The futures market has also played a significant role in Bitcoin’s recent price movements. Massive futures liquidation events have been a common occurrence during periods of heightened market stress, and they often lead to sharp price declines. When traders are forced to close out their positions rapidly due to margin calls, it can trigger a cascade of selling pressure, driving prices lower.
According to the 10x Research report, the latest futures liquidation events have exacerbated the downward pressure on Bitcoin’s price. This situation is likely to continue unless market conditions improve, which seems unlikely given the current economic outlook.
Bitcoin’s current price action has brought it dangerously close to the critical $50,000 support level. This level has historically been a strong point of resistance and support, and losing it could pave the way for a deeper decline.
“The $50,000 mark is a psychological barrier for many traders. If Bitcoin fails to hold above this level, we could see a quick drop to $48,000 or even lower,” said Thielen in the 10x Research report. He also pointed out that the market has seen similar patterns in the past, such as the 2021 bear market, where Bitcoin lost its $50,000 support and quickly tumbled to $36,500.
The broader economic environment cannot be ignored when discussing Bitcoin’s price outlook. The US economy, in particular, has shown signs of weakness, with sluggish growth and persistent inflationary pressures. These factors have contributed to a risk-off sentiment in the financial markets, which has negatively impacted Bitcoin.
As investors seek safer assets during times of economic uncertainty, Bitcoin, often seen as a speculative asset, tends to suffer. The correlation between Bitcoin’s price and traditional financial markets has become more pronounced in recent years, meaning that broader economic weakness could continue to drag down Bitcoin’s price.
Finally, the behavior of long-term Bitcoin holders offers additional insights into the potential for a Bitcoin (BTC) price drop. The 10x Research report notes that long-term holders have been taking profits at higher levels, which is often a sign that the market may have reached a cycle top.
“When long-term holders start to exit, it usually indicates that they believe the market has peaked,” explained Thielen. “This behavior suggests that the current cycle could be nearing its end, and we may see further price declines as the market corrects.”
In conclusion, the combination of declining active addresses, ETF outflows, a low Mayer Multiple, futures liquidations, a weakening US economy, and the behavior of long-term holders all point to a potential Bitcoin (BTC) price drop to $45,000. While some investors remain hopeful for a bullish reversal, the current indicators suggest that Bitcoin could face significant challenges in the near term.
As always, investors should remain cautious and consider the risks before making any decisions in this volatile market. Whether Bitcoin bounces back or continues its downward trajectory will depend on how these factors evolve in the coming weeks. Get more from The Bit Gazette
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