The cryptocurrency market experienced a dramatic slump on Monday, with Bitcoin leading the way after failing to break through the $28,000 resistance level last week.
This sudden drop sent shockwaves through the cryptocurrency market, with major cryptocurrencies following Bitcoin’s lead. Ether suffered losses of just over 2%, while XRP, DOGE, SOL and SHIB recorded losses of 3.78%, 3.73%, 4.65% and 3.92% over the past 24 hours, respectively.
The sudden drop in prices also triggered liquidations across major cryptocurrency exchanges. According to data from Coinglass, within the last 24 hours, a staggering 39,027 traders faced liquidation, resulting in a collective sum of $88.28 million in liquidated crypto assets.
That said, apart from analysts attributing Bitcoin’s sharp decline to profit-taking by both long-term and short-term investors following the surge to $28,000, regulatory concerns and geopolitical tensions continue to cast a shadow over the cryptocurrency market.
Governments and regulatory bodies worldwide have been grappling with how to regulate digital assets effectively. This ongoing uncertainty has kept many institutional investors on the sidelines, hesitant to embrace cryptocurrencies fully.
Presently, analysts are divided on whether the recent slump is a temporary setback or the beginning of a more prolonged bearish trend.
Popular crypto analyst “Rekt Capital” noted that Bitcoin (BTC) could potentially rally up to approximately $29,000 before facing further downside. The analyst who shared a head and shoulder pattern, also highlighted the importance of price staying above the 200 Exponential Moving Average, cautioning that historical data shows that in pre-halving years, BTC has typically retained this level temporarily before eventually losing it as a support.
According to the analyst’s perspective, to nullify the bearish scenario for Bitcoin, it’s imperative to achieve a breakthrough beyond the $31,000 yearly high.
Caleb Franzen, another analyst, noted that Bitcoin could drop back into the $25,000 zone if the price breaches a support trendline along the $27,100 area.
Meanwhile, Michaël van de Poppe observed that Bitcoin started the week with a degree of weakness, as its price dipped below the $27,700 mark. The analyst expressed a preference for Bitcoin to establish a pattern of higher lows and maintain a position above the $27,500 mark as a positive signal for the market’s health.
Nevertheless, other analysts have continued to hope that Bitcoin’s upward trajectory will continue. Analyst ‘Mags’ called the current price action a typical market consolidation phase, anticipating an impending breakout.
“Based on past cycles, it seems that BTC is currently in the second phase, the “Consolidation” phase. Historically, buying in this period has been very profitable.” tweeted Mags.
Bitcoin was trading at $27,699 at press time, down 1.46% over the past 24 hours.