Bitcoin Eyes $74K Drop as Whales Ramp Up Short Bets

Key Takeaways

• Bitcoin’s current technical setup, specifically a rising wedge pattern, indicates a potential price decline toward $74,000 if a critical support level is breached.

• Significant short positions are being opened by large holders, with one whale recently placing a $140 million bet against Bitcoin.

• Market sentiment indicators suggest a shift towards euphoria, which has historically preceded significant price corrections.

The technical analysis for Bitcoin (BTC) suggests that a substantial correction to the $74,000 mark is a possibility. This outlook is reinforced by increasing short exposure from significant market players, often referred to as whales.

Bitcoin’s Rising Wedge Pattern Points to a Potential 34% Price Drop

Observing the weekly chart for the BTC/USD pair reveals a pattern commonly known as a rising wedge. Currently, the price is testing the lower trendline of this pattern, which acts as a support level, situated around $110,000.

A decisive weekly candlestick close below this $110,000 support level would likely pave the way for Bitcoin to test its bearish price target associated with the rising wedge pattern, estimated at $74,000. This target represents a significant 34% depreciation from its current trading price and aligns with the previous all-time high reached in March 2024.

Further bolstering the bearish case is the observed bullish divergence between Bitcoin’s price action and its Relative Strength Index (RSI) on the weekly chart, as illustrated in the accompanying graphic.

Rising wedges are generally recognized as bearish reversal patterns. The continued consolidation of BTC within the defined trendlines of this pattern suggests to some analysts that the current bullish run for Bitcoin might be approaching its conclusion.

According to analyst Captain Faibik, who shared insights via an X post, Bitcoin is still inside the rising wedge and bulls are in control for now, but not for long. Momentum is fading, and once the wedge breaks, bears will take over with a sharp correction ahead.

“Momentum is fading, and once the wedge breaks, bears will take over with a sharp correction ahead.”

Veteran trader Peter Brandt also commented on the potential for a major shakeout in Bitcoin’s price before it could resume its ascent to new all-time highs beyond $126,000. Brandt suggested that while the days of an 80% decline might be over, a retracement to the $50,000-$60,000 range to test lower support levels is conceivable.

“I think the day of the 80% decline is over, but perhaps back to $50-60,000 and test the lower skin of the banana.”

As previously reported, several technical indicators and on-chain metrics align with the projection that the BTC/USD pair could decline to $74,000 in a pessimistic scenario, should the price fail to hold above the crucial $110,000 support level.

Bitcoin Whale Initiates $140 Million Short Position

Amid growing calls for a significant price pullback, Bitcoin bears have intensified their shorting activities. Data from blockchain analytics firm Lookonchain indicates that a whale operating on the Hyperliquid platform has established a short position valued at $140 million, utilizing 5x leverage. This position carries a liquidation price of $137,700.

This is not an isolated incident of large holders betting on Bitcoin’s decline. Earlier in the week, another Bitcoin whale, who had previously profited from shorting BTC, reportedly increased an existing downside bet to $500 million, employing 10x leverage.

Concurrently, on-chain data analysis reveals that Bitcoin’s Net Unrealized Profit/Loss (NUPL) metric has transitioned from the optimism phase into euphoria. Historically, such levels of market exuberance have often preceded significant price peaks and subsequent corrections.

This article does not constitute investment advice. All investments and trading activities involve risk, and readers are encouraged to conduct their own thorough research before making any financial decisions.