BTC Price Dips Below $28,000 – Bitcoin On Chain Analysis May 27

Key Insights:

• BTC price took a dip below $28,000 in the later hours of May 26.
• The crypto market sentiment reached ‘extreme fear’ yet again.
• Analysts expect further price downside as selling pressure mounts.

On Thursday, Bitcoin’s (BTC) price briefly fell below the crucial $29,000 support level in European trading hours. While the top cryptocurrency by market cap quickly recovered above the psychological resistance, its fall to the $28,100 mark set a bearish tone for other major cryptocurrencies.

Notably, the global crypto market cap, in tandem with BTC’s price dip, fell to the $1.23 trillion mark noting a 4.38% decrease over the last day at press time. BTC’s drop to the $28,000 mark followed a relatively positive market response to Wednesday’s release of minutes of the US Federal Reserve meeting held on May 3-4.

The S&P 500 gained close to 1% in the traditional markets, while the tech-heavy Nasdaq was up by around 1.90% over the last day.

So, as bearish pressure intensified in the cryptocurrency market, where could the top coin be headed?

BTC Price Drops to $28,000

After facing a solid resistance at the $30,300 mark, bitcoin price registered a downtick amid higher sell-side pressure. After a move below the $29,800 and $29,500 levels, bitcoin’s fall to the $28,000 mark was something the market expected.

BTC’s price declined below the 21 simple moving average around the $29,000 mark. A fall below the key $29,000 barrier gave way to bears, and a further decline to the $28,250 support zone was seen on Thursday.

At the time of writing, despite BTC’s recovery above the $29,000 mark, a critical bearish trend line had formed at the $29,500 resistance. A move above the $29,500 resistance and the $30,000 mark could be essential to BTC’s recovery over the weekend if bulls can push prices up.

For now, if further price decline continues, major support at $28,500 could aid some relief to bulls. However, a daily close below the $28,500 could mark another price dip for the top crypto.

BTC Longs Liquidated

Data from Coinglass highlighted that over $350 million worth of long and short positions were liquidated in the cryptocurrency market over the last day as the crypto market cap slid to the $1.2 trillion mark.

The recent price drop also gave way to larger exchange inflows as selling pressure continued to rise. Furthermore, on-chain data presented that bigger players were offloading their BTC amid the recent meltdown.

Data from Santiment highlighted that whales holding 1,000 to 10,000 BTC had redistributed more than 30,000 BTC, worth around $870 million, over the last day. Additionally, over 10,000 BTC was sent to exchanges as price decline pushed exchange inflows indicative of a larger bearish market tone.

That said, data from In/Out of the Money Around Price highlighted how the $29,190 and $30,070, where 1.46 million addresses purchased over 900,000 BTC, could act as a massive supply barrier. BTC’s fall under the $29,190 mark has added to further pressure in the market. However, a short-term recovery above this level could push prices ahead.

If bitcoin reclaims the upper support zone at the $30,070 mark, it may have a decent chance of rebounding. However, considering the rangebound price movement and lower lows made on a shorter time frame by BTC’s price, a revisit to the low at $25,370 or even $21,000 could be expected.

More Volatility to Come?

Looking at BTC’s estimated leverage ratio, it could be said that more volatility could push the market an extra mile in either direction. The estimated leverage ratio represents the open interest divided by the coins in circulation. It gives the average leverage used in the market.

When the estimated leverage ratio is high, more and more volatility is coming into the market, and vice versa.

Cryptoquant analysts highlighted that the recent price fall looked similar to the December 2021 dip when the price fell to $42,00. On both occasions, the metric moved down when we saw the price spike and then recovered in the consolidation period that followed the impulse.

In December last year, Bitcoin went to $52,000 and then continued the downtrend. This time too if BTC witnessed an upswing in the near term a retest of the $35,000 mark could be expected however after that price could fall back to the $22,000 zone.

All in all, one thing looks certain that high volatility could rule the market in the days to come as BTC’s price continues to maintain the lower rangebound momentum.