Bitcoin’s price has been dropping rapidly over the past few days, with large red candles showing significant bearish momentum.

If the market does not rebound soon from the key area it currently finds itself at, things could get much worse for the crypto market.

Technical Analysis

By Edris Derakhshi (TradingRage)

The Daily Chart

On the daily chart, the asset has been aggressively declining, breaking below the key $90K support zone. This considerable bearish move comes after a lengthy consolidation around the $100K mark, which the price has failed to continue above.

Currently, the cryptocurrency is testing the 200-day moving average, which is located around the $82K mark and the $80K support level. If these levels are broken to the downside, a much deeper drop could be expected in the mid-term, with the $63K support zone being a potential target.

The 4-Hour Chart

The 4-hour chart shows a horrifying image of the recent price action, as the drop is seemingly getting worse consistently.

However, the RSI shows a massive bullish divergence with the price, which is demonstrated on the chart. Moreover, with the price at the strong support level of $80K, this increases the probability of at least a short-term rebound. Yet, for a full recovery and bull market continuation, the market needs to break above $100K once again.

On-Chain Analysis

By Edris Derakhshi (TradingRage)

Open Interest

The futures market has been the culprit for most of Bitcoin’s price volatility and sudden crashes over the past few years. Once again, the liquidation of high-leverage positions has caused the recent cascade of sell-offs in the perpetual market.

This chart presents the open interest metric, which measures the total number of open futures contracts across all centralized exchanges. The OI has also been dropping rapidly alongside the price, which points to the fact that a massive long liquidation cascade is happening. These liquidations mostly lead to aggravated bearish movement, adding to the aggregate selling pressure.

While futures market cooldowns are necessary for a long-term sustainable uptrend, a deeper drop could make the situation much trickier than it is, as more and more liquidations would occur.

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Cryptocurrency charts by TradingView.