Bitcoin Drops 4.50% But Support Levels Suggest Recovery

Bitcoin (BTC) has experienced a 4.50% decline over the past week, with the potential to revisit the $100,000 level in the coming days. However, data suggests that prolonged trading below this level is unlikely. The Net Realized Profit/Loss (NRPL) chart, which tracks profits and losses from Bitcoin transactions, indicates moderate profit-taking at current levels. This activity is significantly lower than the spikes observed during cycle peaks in March and November 2024, suggesting that the market is not overheated and that Bitcoin’s upward trajectory is far from exhausted.

Another key metric supporting a swift bounce if Bitcoin drops below $100,000 is the short-term realized price at $96,000. This metric represents the average price at which recently transacted Bitcoin were acquired, acting as a critical support level. If Bitcoin dips below $100,000, the $96,000 level could likely act as a floor, attracting buyers and limiting downside. Historically, Bitcoin has not lingered below the short-term realized price for long during bullish cycles, reflecting firm holder conviction and market demand.

Crypto trader Altcoin Sherpa suggested that the current market conditions are primed for a price recovery in the coming days. Highlighting a key support zone between $102,000 and $104,500, where BTC previously consolidated before breaking higher, the trader anticipates a bounce that could push Bitcoin above $107,000 within the next week. Similarly, technical analyst Titan of Crypto noted that BTC is approaching a key technical support level, stating, “BTC pulling back toward the daily Kijun ~$102,700. This area previously held and could act as a solid base for the next move.”

Bitcoin’s futures open interest (OI) experienced a $3.7 billion wipeout as the BTC price fell to $104,500 from $108,000. This can be considered a healthy market reset, as it reflects the liquidation of overleveraged positions, reducing market euphoria. High OI often indicates over-leveraged trading, which can amplify volatility. When a slight price drop triggers a significant number of liquidations, it clears out speculative positions, stabilizing the market.