Bitcoin’s stable range between $59,000 and $60,000 is beginning to raise concerns. The cryptocurrency has remained within this narrow band for the past week, a pattern reminiscent of a calm phase from 2024, yet it is developing below significant support levels in a declining market. A break below this range could lead to a downturn towards $40,000.
— For five consecutive days, Bitcoin has traded within the $59,000 to $60,000 range, a situation that analysts deem precarious due to its positioning beneath crucial support levels and the downward trends of the 50- and 200-day moving averages.
— Analysts caution that if this consolidation results in a downward break, Bitcoin may decline towards the $40,000 mark.
— Market sentiment is being affected by Strategy’s plan to potentially liquidate over $1 billion of its Bitcoin reserves, a strengthening dollar, and a shift of capital into U.S. stocks driven by optimism regarding AI spending.
Bitcoin
«This is a rather dangerous consolidation for the bulls,» Kuptsikevich said, noting that the 2024 version formed in a rising market while this one is forming in a falling one. If the pattern breaks lower rather than resolving higher, he said, the next meaningful step down is around $40,000.
The current range is typical. Bitcoin spent a significant portion of 2024, from March to October, consolidating between $55,000 and $70,000, occasionally exceeding these boundaries. However, the current scenario is riskier due to its positioning, as noted by Alex Kuptsikevich, chief market analyst at FxPro, in an email to Decryptnews.
This range lies below the levels that triggered rebounds in February and earlier this month, along with the 50-day and 200-day moving averages. Traders are closely monitoring these averages, both of which are currently trending downwards, suggesting a bearish outlook.
This indicates a downtrend rather than a market establishing a foundation for an upward movement.
«This consolidation poses considerable risks for bullish investors,» Kuptsikevich stated, highlighting that the 2024 consolidation occurred in a rising market, whereas this one is taking place in a declining market. If the pattern breaks downwards instead of upwards, he indicated that the next significant decline could be around $40,000.
Some on-chain metrics support this view. Pseudonymous CryptoQuant analyst Darkfost pointed out signs that long-term holders are beginning to capitulate, or sell at a loss. Historically, this phase has represented attractive entry points for buyers, despite indicating short-term challenges.
The scenario aligns with a market where demand remains weak. Active addresses and transaction activity have lingered at the lower end of their recent ranges during the downturn, as Decryptnews reported earlier on Tuesday.
The pressure on Strategy contributes to the growing anxiety.
The largest corporate Bitcoin holder saw its preferred stock, STRC, drop to a record low near $71 last week, while its common stock plummeted 25% over the week, reaching its lowest point since February 2024.
The company has announced its intention to possibly sell over a billion dollars in Bitcoin to stabilize its finances, marking a significant departure from founder Michael Saylor’s ‘never sell’ philosophy. The board has given management the authority to sell from the reserves at any time without needing to approve each transaction separately.
The possibility of a substantial seller looms over an already fragile market. The macroeconomic environment offers little support. The U.S. dollar has strengthened, and a rising dollar typically negatively impacts Bitcoin and other dollar-denominated assets.
As of now, BTC seems poised to finish the second quarter with a 13% loss. In contrast, U.S. stocks are wrapping up one of their best quarters in years, buoyed by optimism over AI spending, the same trend that has directed capital towards equities and away from crypto throughout the month.
