An analyst warns that Bitcoin’s recent liquidation event might not yet be over. There is still residual leverage that could push prices into the $70,000 to $80,000 range.

Crypto analyst James Check described the recent market downfall as a “2-sigma long liquidation event” which eliminated a significant portion of speculative investors. Although most leverage has been removed, he noted that the market has a remarkable ability to detect the last remaining holdouts and cautioned that further liquidation is likely on the horizon.

“We wouldn’t be too surprised if we wick into the $70k-$80k zone to flush the final leverage pockets.”
（「私たちは、最終的なレバレッジポケットを排出するために$70k-$80kゾーンに入ることをあまり驚くことはないでしょう。」）

A 2-sigma liquidation event signifies a major market movement that results in mass liquidations of leveraged positions. The term “2-sigma” denotes the statistical significance of the price fluctuations.

Bitcoin recently lost over $24,000 within just 10 days, hitting a seven-month low of approximately $82,000 on November 21.

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

Bitcoin Shows Signs of Local Stabilization

According to Augustine Fan, head of insights at crypto trading software firm SignalPlus, the crypto markets are starting to show tentative signs of stabilization following last week’s significant sell-off, suggesting a possible local bottom has been reached.

“Markets are currently so oversold from both sentiment and technical perspectives (such as Bollinger Bands), and prices are likely to have seen local lows for now, absent any new exogenous factors (such as DAT forced selling),” said Fan.

He predicts prices will fluctuate between $82,000 and $92,000, identifying the strong price support near $78,000.

“A sustained break below would open up further significant downside, but is not the base case scenario for now.”

The Distributing Whale Backdrop

Analysts at blockchain data firm CryptoQuant have recognized a local bottom that might lead to a more sustained rebound in prices.

“On-chain data shows a market shaped by institutional redistribution, structural weakness, and a rebound that may signal a local bottom,” noted Carmelo Alemán on Tuesday.

However, he cautioned that the significant cohort of BTC whales, holding between 1,000 to 10,000 BTC, are still selling, which hinders the confirmation of a trend reversal.

“The recovery is promising, but the end of the bearish phase requires a clear shift in whale behavior.”

Related: Bitcoin’s Sharpe ratio is nearly at zero, a rare risk-reward signal