Bitcoin Price Predicted to Fall to $50,000, Says 10x Research

Recent analyses from 10x Research have underscored a significant downturn in Bitcoin’s value, which plummeted from just over $60,000 to below $57,000 on July 4, with projections suggesting it could sink further to around $50,000.

This marked decrease represents a pivotal shift in market sentiment, driven primarily by dwindling buying activity as selling pressure accelerates.

Market Sentiment and Liquidity

Markus Thielen, an analyst at 10x Research, pointed to early June data that hinted at an overbought market, suggesting that a correction was imminent.

The substantial 5.44% drop in Bitcoin’s price has notably impacted investor sentiment and market liquidity, with Bitcoin’s market capitalization hitting $1.1 billion and trading volume increasing by 57%.

The report from 10x Research indicates that the breach of the $60,000 support level triggered a frantic search for liquidity among sellers, especially as critical buyers, such as Bitcoin miners and spot ETF investors, pulled back.

This dynamic has left the market in a precarious position, with only poorly informed traders currently willing to engage in purchases.

The firm maintains a cautious outlook on Bitcoin’s future pricing, advising traders to emphasize risk management in preparation for continued volatility. The analysis conveyed a clear warning against complacency in the current market environment.

Additional insights from IT Tech attributed the downward trend to long-term Bitcoin holders deciding to cash in on significant profits. On July 3, the spent output profit ratio (SOPR) for long-term holders exceeded a value of 10, indicating that Bitcoin was sold for at least ten times its initial purchase price.

These holders, typically maintaining their investments for around five to seven years, have significantly contributed to the prevailing selling pressure.

Decline in Notional Open Interest

In the derivatives market, notional open interest in Bitcoin futures and perpetual futures has declined approximately 18%, from $37 billion to $30.2 billion within a month, mirroring a 14% fall in the cryptocurrency’s spot market price.

Initially, data suggested a reduction in bullish leveraged bets, but this interpretation might be overly simplistic and masks more complex market dynamics.

Coinglass data revealed that while notional open interest has declined, actual open interest, measured in BTC terms, has remained stable, indicating underlying bullish sentiments might still be in play.

Despite the broader market downturn, perpetual funding rates charged by exchanges every eight hours have consistently held positive, suggesting a bias towards bullish bets.

Laurent Kssis, a crypto ETF specialist at CEC Capital, echoed these mixed market signals, noting that while there is hesitation to place long orders, more traders are implementing protective strategies as market uncertainty remains high.

He also highlighted that recent liquidity washouts were sufficient to push the market below the $60,000 threshold, though hedging continues to be a significant component of trading activities.

Potential for Upward Trend

Observers maintain a cautious optimism that, once the selling pressures from Mt. Gox repayments and miners abate, Bitcoin could potentially resume an upward trend, possibly in sync with broader market indices like the Nasdaq.

This sentiment is supported by the consistent positive spread between futures and spot prices, known as the basis, which remains appealing to traders betting on a market breakout as macroeconomic tailwinds accumulate.

Griffin Ardern, head of options trading and research at crypto financial platform BloFin, noted significant bullish activities on the Bitfinex platform, where whales have been purchasing dips in the spot market since late June.

This activity has not been mirrored in other derivatives markets, suggesting a unique bullish pressure from Bitfinex.

Meanwhile, according to QCP Capital, the options market remains heavily skewed towards the topside, with traders buying topside bets in anticipation of a potential year-end rally.

This aligns with observations of significant buying interest in longer-term options at the $100K/$120K strike levels, indicating a strong belief in Bitcoin’s recovery to higher price points.

The combination of these market dynamics points towards a resilient underlying confidence among traders that could herald a turnaround in Bitcoin’s fortunes as the year progresses.