Bitcoin Faces Potential 40% Drop as Analyst Warns of Liquidity Traps

A prominent analyst, known as “il Capo of Crypto,” has issued a cautionary note regarding the recent recovery in Bitcoin's price, suggesting that it could be a trap for unsuspecting investors. The analyst's warning comes amidst a backdrop of volatile market conditions, where Bitcoin has seen significant price fluctuations. The analyst's grim outlook is based on the observation that the recent price movements could be setting up liquidity traps, which could lead to further price declines.

The analyst points out that there are more short-side liquidations clustered between $108,300 and $109,000 than long-side liquidations between $103,000 and $106,000. This imbalance suggests that there is a higher risk of a price drop, as short-side liquidations could trigger a sell-off. The analyst's warning is further supported by the fact that Bitcoin's price has failed to regain momentum after briefly falling below $100,000 amid Middle East tensions. Despite bouncing back to $106,000, the price has since stagnated, indicating a lack of buying pressure.

Cautious analysts have also predicted a potential drop to $80,000 due to liquidity traps and resistance levels. The analyst's forecast is based on the observation that there is a significant amount of resistance at higher price levels, which could prevent Bitcoin from sustaining its upward momentum. The analyst's warning is further supported by the fact that Bitcoin's price has failed to break through key resistance levels, despite several attempts.

The analyst's warning comes at a time when Bitcoin's price has been experiencing a slight upward movement, but this has been met with skepticism from some analysts. The analyst's caution is based on the observation that the recent price movements could be setting up liquidity traps, which could lead to further price declines. The analyst's warning is further supported by the fact that Bitcoin's price has failed to regain momentum after briefly falling below $100,000 amid Middle East tensions.

Il Capo of Crypto believes Bitcoin still has room to fall, potentially slipping below the six-figure mark again before testing a support zone between $92,000 and $93,000. If that level fails to hold, he expects an even deeper slide to the $60,000–$70,000 range, which he views as a possible bottoming phase. The analyst also issued a stark warning for altcoin investors. If Bitcoin begins its descent, he anticipates altcoins could suffer even sharper declines — possibly losing between 50% and 80% of their current value. According to him, the broader crypto market remains overexposed and vulnerable to another correction wave.

Since late May, the analyst has maintained a strong short position, particularly targeting altcoins. Despite signs of strength in recent price action, he remains firmly in bearish territory, suggesting that the true shakeout may still be ahead. The analyst's grim outlook is based on the observation that the recent price movements could be setting up liquidity traps, which could lead to further price declines. The analyst's warning is further supported by the fact that Bitcoin's price has failed to regain momentum after briefly falling below $100,000 amid Middle East tensions.