Bitcoin investors may not be out of the woods yet, according to crypto analyst James Check, who suggests there’s still more leverage that could be liquidated.
Check described the recent market crash as a “2-sigma long liquidation event” that eliminated a significant portion of speculative traders. While most of the leverage has already been cleared, he warns that the market has an uncanny ability to detect the final holdouts, meaning another wave of sell-offs could still be ahead.
“We wouldn’t be too surprised if we wick into the $70k-$80k zone to flush the final leverage pockets.”
A “2-sigma” liquidation event in crypto describes a major market move that forces widespread liquidations of leveraged positions, with the term “2-sigma”—or two standard deviations—signifying the statistical size of the price swing.
In just ten days, Bitcoin lost over $24,000, falling to a seven-month low of roughly $82,000 on November 21.
Bitcoin Appears to Have Found a Local Bottom
The crypto market is showing early signs of stabilization following last week’s sharp sell-off and may have reached a local bottom, according to Augustine Fan, head of insights at crypto trading platform SignalPlus, speaking to Cointelegraph.
“Markets are currently extremely oversold, both in terms of sentiment and technical indicators like Bollinger Bands,” Fan said. “Prices have likely hit local lows for now, assuming no new external shocks, such as forced selling from DAT.”
Fan expects prices to range between $82,000 and $92,000 and identified the next significant price support around the $78,000 area.
“A sustained break below would open up further significant downside, but is not the base case scenario for now,”
Bitcoin Whales Continue to Offload BTC
Blockchain analytics firm CryptoQuant has spotted signs of a local bottom that could pave the way for a more sustained rebound.
“On-chain data points to a market influenced by institutional redistribution, structural weaknesses, and a rebound that may indicate a local bottom,” analyst Carmelo Alemán said Tuesday.
However, the key whale segment holding between 1,000 and 10,000 BTC is still selling, which keeps a full trend reversal from being confirmed, he added.
“The recovery is promising, but the end of the bearish phase requires a clear shift in whale behavior.”
