Analyst Forecasts Potential Final Leverage Flush for Bitcoin Below $80K

Bitcoin investors may not yet be out of the woods, as one market analyst warns that further leverage could be washed out in the coming days.

Key Takeaways

Analyst James Check warns of additional leverage being flushed from the Bitcoin market.
Bitcoin experienced a steep decline of over $24,000, hitting a low of around $82,000 on November 21.
Market sentiment suggests Bitcoin may have found a local bottom, according to Augustine Fan from SignalPlus.
Despite signs of potential recovery, significant selling from Bitcoin whales continues, indicating caution in confirming a trend reversal.

Bitcoin final leverage flush below $80K is possible, warns analyst

In a recent analysis, crypto expert James Check characterized the latest downturn as a significant "2-sigma long liquidation event," which forced many high-risk traders to exit their positions. Although much of the leverage has been eliminated, Check notes there could still be more selling pressure ahead. Bitcoin recently experienced a dramatic decline, dropping over $24,000 within ten days and reaching a seven-month low around $82,000. On the other hand, some analysts are beginning to see signs of stabilization in the market.

Understanding the Current Market Conditions for Bitcoin

According to crypto analyst James Check, the pain for Bitcoin investors might not be finished just yet. He suggests that there could still be more leveraged positions being forced out of the market. Check referred to the recent downturn as a “2-sigma long liquidation event,” which has already led to losses for a segment of high-risk traders.

While he acknowledges that most leverage has dissipated, he warns that the market can detect lingering hold-outs, indicating a possibility of further market fluctuations.

What is a 2-Sigma Liquidation Event?
A 2-sigma liquidation event refers to a significant market shift that leads to widespread liquidations of leveraged positions. The term “2-sigma” signifies a notable statistical price swing, illustrating the volatility in cryptocurrency markets.

Bitcoin's value plummeted more than $24,000 in just ten days, marking a low of approximately $82,000 on November 21.

Graph of Bitcoin's 2-sigma liquidation event. Source: James Check

Signs of Stabilization in Bitcoin Prices

Following last week’s sharp decline, the cryptocurrency markets are beginning to show tentative signs of stabilization. Augustine Fan, head of insights at SignalPlus, discussed with Cointelegraph her observations around the current market environment.

Fan noted, “Markets are currently so oversold from both sentiment and technical perspectives (like Bollinger Bands)." She suggests that prices have likely hit local lows for now, assuming no unexpected external factors, such as forced selling, come into play.

She predicts Bitcoin pricing will likely remain in the range of $82,000 to $92,000, with significant support appearing around the $78,000 mark.

Analyzing Bitcoin Whale Activity

Analysts from the blockchain data firm CryptoQuant have identified a potential local bottom that could pave the way for a more sustained recovery. Analyst Carmelo Alemán noted, “On-chain data shows a market characterized by institutional redistribution and structural weakness, possibly signaling a local bottom.”

However, he highlighted that the critical cohort of whales holding between 1,000 to 10,000 BTC continues to distribute their holdings. This ongoing selling pressure complicates the ability to confirm a definitive trend reversal.

For more insights on the Bitcoin market and trader sentiment, refer to our related articles on Bitcoin's performance and risk assessments.

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