Bitcoin on the Brink: Will the Bull Run Bleed Out Below $61,000?

Bitcoin bulls, buckle up! The world’s leading cryptocurrency is facing a critical juncture, teetering on the edge of a potential breakdown below $61,000. Let’s dive into the technical analysis and on-chain metrics that are causing concern.

Technical Hurdles: Support Levels Under Threat

  • Trendline Tests: Bitcoin has been testing familiar support trendlines, leading to recent price declines. The lack of upward momentum is a cause for concern, especially considering the low-timeframe volatility that’s impacting liquidity.

  • Crucial Support Zones: Traders are keeping a watchful eye on two key support levels: the 100-day simple moving average (SMA) currently at $61,200 and the short-term holder realized price (STH-RP) at $60,100. These levels acted as crucial support during the previous bull market, and a breakdown below them could signal a significant shift in momentum.

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A Brief Dip, But Not a Breach (Yet):

Bitcoin did experience a dip to $56,500 last week, but it didn’t hold below these support zones for an extended period. This provides some hope, but the bulls need to see a stronger rebound.

Higher Timeframe Analysis: Bulls Need to Defend Key Levels

  • 100-Day SMA & Monthly Open: Popular trader Skew highlights the importance of the 100-day SMA and the monthly open at $60,600 on higher timeframes. These levels act as significant resistance that the bulls need to overcome.

  • Absorption of Selling Pressure: Skew emphasizes the need to see evidence of buying pressure absorbing any selling activity. This would confirm strong underlying demand for Bitcoin and help reverse the current bearish sentiment.

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Network Fundamentals: Mining Difficulty Adjusts

  • Difficulty Downturn: Bitcoin’s price movements have a knock-on effect on network fundamentals. The mining difficulty, which measures the computational effort required to mine new Bitcoins, is poised for a 5.5% decrease – the largest downward correction since late 2022, when Bitcoin was trading below $20,000. This could be a sign that miners are starting to feel the pinch.

  • Hashrate Holds Steady (For Now): Another crucial mining metric, the hashrate, has also been declining. However, the difficulty adjustment is what truly matters for miners, as it determines how much Bitcoin they can mine per unit of computational power. Assuming a 7% difficulty adjustment, the hashrate would still be around 585 EH/s, indicating ongoing mining activity despite the recent price slump.

The Bottom Line: A Pivotal Moment for Bitcoin

The coming days will be critical for Bitcoin. If the price breaks decisively below $61,000 and fails to reclaim the 100-day SMA and STH-RP, it could signal a deeper bearish correction. However, if the bulls can defend these support levels and generate renewed buying pressure, the uptrend could remain intact. One thing is certain: volatility is here to stay, so Bitcoin enthusiasts should fasten their seatbelts and closely monitor the price action.

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