Bitcoin Drops Below $104K - Analysts Predict a Quick $117K Recovery

Bitcoin (BTC) has fallen below $104K as of Friday, marking a 15-week low amid escalating selling activity resulting from the US banking crisis.

Although the market is steeped in uncertainty, some analysts maintain that the rise of short positions could lead to a swift reversal.

Short Positions Surge but $117K Recovery Approaches

Joao Wedson, the founder of Alphractal, indicated that numerous traders are making bearish bets on Bitcoin, signaling the end of its bullish phase. However, this increase in short-selling could pave the way for an imminent rebound. If enough short positions are compelled to cover, BTC’s price may rebound to around $117K “within hours.”

Wedson’s assertive forecast follows a 6% drop in Bitcoin’s value within the last 24 hours. Yet, he is not the sole observer optimistic about a rapid revival.

Data from CryptoQuant shows that Bitcoin’s recent fluctuations underscore the harsh dynamics of leverage in trading. Notably, two significant liquidation events on Binance wiped out overextended long positions, starting around $114,600 with a loss of over $573 million.

This area attracted late buyers hoping that the prior breakout would sustain; however, the market reversed sharply, leading to cascading liquidations and further undesirable pressure on the price.

A second wave of liquidations near $111,270 resulted in more than $383 million in losses, impacting those expecting a swift recovery. Such scenarios depict the functioning of a long squeeze: traders leveraging too heavily to purchase Bitcoin face mass liquidations as minor downturns occur, accelerating declines hastily.

Retail investors often aggravate this phenomenon by raising funding rates and intensifying the liquidation squeeze. Historically, after such events, weaker participants create a more stable environment that enables short-term recoveries as selling pressures ease.

Looking forward, new liquidation points are forming around $117,000 and $127,000, critical areas where stop-loss orders and leveraged positions might catalyze further market movements.

With highly leveraged longs eliminated and weaker traders out of the market, CryptoQuant suggests Bitcoin may have the opportunity to rebound towards the $117,000 recovery threshold, transforming recent setbacks into a short-term bullish scenario.

Critical Trendline Under Scrutiny

Market analyst Rekt Fencer stated that the most significant Bitcoin trendline seen over the past two years is currently being tested. This ascending support line has historically instigated major rallies post-2023. Analytical data demonstrates that successful bullish retests of this trendline have typically led to substantial upward movements.

Conversely, a definitive break below this trendline could signal the conclusion of the ongoing uptrend and invite deeper market corrections.