Bitcoin Plunges Below $29.5K After Bullish Breakout – Is Downside Pressure Chasing BTC Price?

Recently, bitcoin’s value has declined significantly, falling below the $29.5k threshold. This decline comes as a surprise, especially after a bullish breakout that previously instilled bullish confidence among traders with MicroStrategy’s BTC buying plans. The resulting drop in bitcoin price points to downward pressure, suggesting that the recent surge may have been a trap for traders.

Bitcoin addresses are headed for loss

According to a recent report by Glassnode, the amount of Bitcoin addresses lost (based on a seven-day moving average) peaked at around 14.043 billion today. This represents a new one-month record, beating the previous high of 14.041 billion set on July 31, 2023.

This trend indicates a group of investors who bought BTC at high prices and are currently suffering losses due to recent price volatility. “Every short position built up over the past few days has been completely eliminated,” analyst Byzantine General explained in a recent tweet.

This claim is supported by data from Coinglass, which shows that $28 million worth of BTC short positions have been liquidated, with an additional $13.8 million liquidated following the recent plunge. This represents the largest short liquidation since July 14th and is undoubtedly having a significant impact on the current price action.

BTC’s market cap has also dropped significantly, posting a loss of over $14 billion in just one day. The asset’s market cap has fallen from a peak of $582 billion to the current level of $568 billion.

Interestingly, Bitcoin’s trading volume has taken a significantly different trajectory over the same period. Instead of reflecting the recent drop in BTC price, the trading volume is showing a slight upward trend.

BTC price is preparing for another drop

Bitcoin faced minor buying pressure after the price surged above $30,000. As a result, the bears gained control and opened short positions, causing the asset to fall well below $29.5k. Currently, BTC price is in free fall and it could revisit its crucial support at $28,500 this week if buyers fail to take control. At the time of writing, BTC is priced at $29,249 and is down over 0.09% in the past 24 hours.

The bearish trend in BTC price below EMA20 and the steep decline in RSI towards the midline signify a major advantage for the bears. Any attempt to reverse now could face selling pressure at the 20-day EMA. If the price declines from $29,000 and breaks the $28,500-$28,300 range, it could trigger a drop to $27,200.

To prevent this decline, the bulls would need to sustain the price above the 20-day EMA. BTC price might initially scale above $29,500 and then revisit the resistance zone near $30.1k

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