Bitcoin Crashes Below $85K Amid Surging Leverage – A Trap for $80K?

Bitcoin’s recent drop below $85,000 has traders worried that the cryptocurrency may not get back on its bullish ride soon. Over the last 24 hours, BTC has dropped another 2%, which hints at growing selling pressure. The pullback we have seen in BTC brings it to a support area that traders believe we will now test at $80K. In conjunction, massive liquidations are coming in the crypto derivatives market as there is almost $200 million in total market-wide liquidations. Out of this, $131 million of these liquidations are long liquidations, which suggests volatility and even more selling pressure.

Bitcoin’s Potential Breakdown to $80K

By closely observing Bitcoin’s 4-hour price chart, we can identify a rising channel pattern with BTC testing a long-established resistance trendline recently. Bitcoin had a small rise but is now dropping again. It is currently consolidating within a certain price range but struggling to hold above important support levels. At the time of writing BTC was exchanging hands at $84,039.39. In addition to technical levels, the price action also has produced its second-highest rejection candle lately which indicates a sustained correction. Technical indicators also suggest downside risk with MACD and signal lines having crossed negatively, which is a bearish sign that usually results in selling off the asset.  If bearish momentum continues, BTC could be testing the $80K support level previously quicker than expected.

Bitcoin ETF Inflows Surge, Led by BlackRock

Although the crypto derivatives market continues to exhibit greater volatility, institutional interest in Bitcoin has remained unabated. On March 20, U.S. spot Bitcoin Exchange-Traded Funds (ETFs) saw net inflows of USD$165.75 million, the fifth day of positive inflow into Bitcoin ETFs. 

Will Bitcoin Recover to $95K?

While Bitcoin is presently undergoing transient volatility, certain analysts foresee that increasing institutional interest will support the price in the future. According to the 4-hour price chart, Bitcoin’s immediate support level is around $83,000. If this support is held, Bitcoin could have the opportunity to rebound and test the resistance trendline. On the other hand, if Bitcoin breaks below $83,000, it could decline further toward the support zone of $78,350. If Bitcoin has a strong breakout rally, it could reach the 61.80% Fibonacci level of about $95,350. Traders are watching Bitcoin’s price action to see whether the current pullback will be considered a temporary correction or the start of a more significant downturn.

Conclusion

Bitcoin’s recent price movement shows how the bulls and bears are still fighting. Despite the short-term indicators suggesting a continuation of the downturn, the strong ETF inflows suggest long-term optimism. The next few days will tell us whether or not Bitcoin can hold key support levels through or drop further to $80K.