Bitcoin’s price has managed to push above 71,000 dollars this Monday, right after the crypto market sentiment plummeted to reach alarming historic lows recently. According to the “Fear & Greed” index, the market recorded a reading of 7 points, indicating a panic phase that, for many analysts, represents a clear buying opportunity.
Michaël van de Poppe, founder of MN Capital, noted that these extreme sentiment readings usually precede the definitive bottoms of the global financial market. With the daily relative strength index (RSI) falling to 15 points, current oversold conditions reflect scenarios similar to those seen during the 2020 COVID-19 crash on most platforms.
Liquidation liquidity and bullish signals in the short term
Despite the structural weakness, data from CoinGlass suggests that there is a massive imbalance in accumulated short positions above current prices. With more than 5.45 billion dollars in potential liquidations to the upside, a corrective movement could force a massive closure of bearish positions, pushing the price violently toward new technical levels.
This superior liquidity contrasts sharply with the barely 2.4 billion dollars at risk if the asset were to return to 60,000 dollars soon. However, the weakness in spot buying volume remains a significant obstacle, as the current dominance of derivatives could delay a sustained organic recovery for the leading market criptocurrency worldwide.
Because Bitcoin is trading below its 50-day moving average, located near 87,000 dollars, the market is going through a technical “repricing” phase. This gap reflects a deep correction following the last rally, suggesting that, although the crypto market sentiment is negative, a solid base is being built for the future.
What impact does selling pressure have on derivatives markets?
Persistent pressure in the futures markets has kept investors on edge, especially after observing a negative net taker volume lately. According to various analysts, the buy-sell ratio on platforms like Binance has fallen below 1, which confirms a selling dominance that requires a demand spot much stronger to be reversed effectively.
The importance of this phenomenon lies in the divergence between retail panic and strategic institutional accumulation at key support levels. Although the current price shows signs of fatigue, history suggests that periods of extreme fear have been, traditionally, the most profitable moments for investors with a long-term vision in this sector.
For traders, the 60,000 dollar level remains the most relevant psychological and technical support of the entire current cycle. If the crypto market sentiment does not improve soon, there is a risk that the price will seek lower Fibonacci retracement levels, placing the possible definitive bottom even near 57,000 dollars.
In the coming days, attention will be focused on the ability of buyers to absorb the persistent supply in the main exchanges. Without a doubt, the resolution of this conflict between shorts and longs will determine if Bitcoin is ready to start a new ascent toward its historical highs or if it will face a prolonged consolidation.
