A CryptoQuant analyst has revealed that Bitcoin (BTC) is still at risk of a deeper price correction even as the halving approaches.
According to a quicktake from Gaah on the on-chain analytics platform, the crypto market is still hot as it is in a dangerous price region for leveraged traders. Significant pressure could trigger a correction that would destroy Bitcoin's current price structure.
BTC faces correction risk
At the time of writing, open interest for Bitcoin was hovering in the mid-range, suggesting that investors have a neutral sentiment regarding their interest in new positions. Regardless, the price of BTC remains within the range of the last top created positions in March.
The open interest range is also volatile at the high end, meaning there is scope for further liquidations by leveraged traders looking for liquidity. Gaah said that this region is dangerous for traders and any significant pressure could lead to a correction that would alter the price structure, causing BTC to decline before reaching a new all-time high.
“It is a dangerous price region for leveraged traders and if they are pressured it could lead to a deeper correction that breaks the current price structure. This would lower the open interest area to the lower band, the region of extreme fear, marked in red on the chart,” Gaah explained.
A euphoric market mood
Furthermore, the general market sentiment is euphoric, as evidenced by the funding rates in the Bitcoin futures market, which are currently in the upper range. This indicates a period of extreme greed and creates room for a sharp decline.
Gaah's analysis comes as BTC recovers from a decline over the past three weeks. The cryptocurrency has fallen from an all-time high of $73,700 on March 14 to less than $62,000. Earlier this week, the asset found its way back to the $70,000 area and remained at that level. However, according to data from CoinMarketCap, it continued to fall over the past few hours to $69,300 at the time of writing.
Meanwhile, CryptoQuant announced a few days ago that high demand from large BTC investors would be the main driver of the asset's post-halving recovery as the impact of the quadrennial event has faded.
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