A CryptoQuant analyst has revealed that Bitcoin (BTC) still faces the risk of a deeper price correction even as the halving event draws near.
According to a Quicktake by Gaah on the on-chain analysis platform, the crypto market is still hot as it is in a dangerous price region for leveraged traders. Significant pressure could trigger a correction that would break bitcoin’s current price structure.
BTC Faces Correction Risk
At the time of writing, open interest for Bitcoin hovered around the middle range, signaling that investors have a neutral sentiment in their interest in new positions. Regardless, the price of BTC remains in the region of the last top-created positions in March.
The open interest range is also volatile in the upper region, meaning there is room for more liquidations from leveraged traders in search of liquidity. Gaah said this region is dangerous for traders, and any substantial pressure could lead to a correction that would alter the price structure, causing BTC to go lower before registering a new all-time high.
“It’s a dangerous price region for leveraged traders and if pressured could trigger a deeper correction breaking the current price structure. This would take the Open Interest range down to the lower band, the Region of Extreme Fear, marked in red on the chart,” Gaah stated.
A Euphoric Market Sentiment
Moreover, the general market sentiment is euphoric, as seen in the Bitcoin futures market funding rates, which are currently high in the upper range. This indicates a period of extreme greed and creates room for a major decline.
Gaah’s analysis comes as BTC recovers from a decline in the last three weeks. The cryptocurrency has plummeted from an all-time high of $73,700 recorded on March 14 to less than $62,000. Earlier this week, the asset found its way back to the $70,000 range and has remained around that level. However, it fell further in the past few hours to $69,300 at the time of writing, per data from CoinMarketCap.
Meanwhile, CryptoQuant disclosed a couple of days ago that a high demand rate from large BTC investors would be the key driver of the asset’s post-halving rally, as the effects of the quadrennial event have been diminishing.
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