The price of the flagship cryptocurrency Bitcoin has recently dropped below its 200-day trendline after hitting a low above the $57,000 mark and losing its key $60,000 support level, sparking concerns of a potentially “extreme” price crash that would see it trade near $40,000.
Andrew Kang, co-founder of Mechanism Capital, highlighted parallels between the current price action and the lead-up to the 2021 crash, pointing to the extended period BTC has been within its price range, which exceeds the duration seen before the crash in 2021.
Moreover, Kang noted there are over $50 billion worth of cryptocurrency leveraged positions near an all-time high, and added most market participants “are not appreciating the significance of a potential loss of a 4-month range on Bitcoin.”
Kang has revised his projections for a potential Bitcoin bottom, suggesting a steeper decline than previously anticipated as he now sees the cryptocurrency fall to the $40,000 range, a scenario that could be “quite damaging to the market and likely require a few months of chop/downtrend” before an upward reversal.
Most market participants are not appreciating the significance of a potential loss of a 4-month range on Bitcoin
The closest parallel we can draw is to that of the range of May 2021 where we also came off a parabolic rally of BTC and alts
$50B+ of crypto leverage here is… https://t.co/R3qAcCajAC pic.twitter.com/B4bpeoZwxo
— Andrew Kang (@Rewkang) July 3, 2024
However, as CryptoGlobe reported, the head of research at cryptocurrency brokerage FalconX, David Lawant, has recently suggested Bitcoin could see a dramatic upward price swing based on the current discount on the Coinbase Bitcoin premium and its historical significance.
Lawant noted that the last time the Coinbase Bitcoin premium was as negative as it currently was back in October 2023, when BTC was trading at around $27,000 and before the cryptocurrency entered a bull run to a new all-time high above $73,500.
In his post Lawant pointed to the indicator’s historical significance and pointed to a potential rise after BTC since corrected from over $73,000 to around $60,000 at the time of writing.
Featured image via Unsplash.
