These Are The 3 Levels Bitcoin Must Hold To Avoid Doom

Reynaldo Marquez

Last Updated: June 11, 2024 9:31 am

2 mins read

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Bitcoin is showing signs of bullish momentum on lower timeframes. The cryptocurrency managed to stay above its 2017 all-time high, around $20,000, as the U.S Federal Reserve (Fed) announced an increase in interest rates by 75 basis points.

As the financial institution was within expectations, Bitcoin and other risk-on assets were able to see some relief. At the time of writing, the number one crypto by market cap stands at $21,300 with a 3% profit in the last 24 hours.

Bitcoin BTC BTCUSD — BTC trends to the downside on the 4-hour chart. Source: BTCUSD Tradingview

Data from Glassnode indicates that BTC holders experienced their largest Realized Loss in history as the cryptocurrency failed to remain in its previous range, around $28,600 to $31,500. BTC investors lost over $4.2 billion which, as the on-chain analytic firm claims, “eclipses all major sell-offs in 2021” and 2020.

These losses affected long-term BTC holders (LTH). Unlike speculators and short-term BTC holders, LTHs are often impervious or more resilient to downside price action. This time the selling pressure was too hot and forced these investors to capitulate out of their positions:

Long-Term Holders however realized major losses, equal to 0.007% of the Market Cap per day. This is almost as large as March 2020 and is the first major LTH capitulation event in the 2021-22 cycle.

The downside pressure has been mitigated for the short term. However, if the bears resume their attack, Bitcoin must hold 3 critical levels to prevent a doom scenario.

This could set the cryptocurrency back to its 2020 levels and trigger an even bigger capitulation event. According to Whalemap, BTC’s price must stay above $19,100, $16,100, and $14,000 to prevent this scenario.

Conversely, the capitalization event described by Glassnode has pushed BTC’s price into its Realized Price zone. As Whalemap added, every time BTC’s price has touched this level, as the chart below shows, the cryptocurrency is able to bounce back to previous highs.

Will Bitcoin See Bullish Continuation?

Trading desk Cumberland believes the global financial markets are “steadily grinding lower”. The U.S. Fed announced the first of a series of interest rate hikes which could prove inefficient to reduce inflation in the U.S. dollar.

The crypto market and Bitcoin could enter a state of “maximum violence”. Supported by the reduction of global liquidity, less money available to purchase BTC, and the reduction of credit. The latter has begun to take an effect.

Crypto could see a bigger loss because it lacks the countermeasures available for traditional finance actors. While the crypto market could see another series of liquidations and more capitulation events on the backdrop of less liquidity, Cumberland claims these are signs of a potential market bottom:

It’s difficult to predict the scale of the liquidations which have yet to occur, but this type of activity tends to correspond with prices bottoming out. No one has enough dry powder to fight the Fed, but the faster they hike, the shorter hike cycle and the sooner the reversal.

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

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