Bitcoin [$BTC] has extended its decline, with the asset struggling once again to clear the $65,000 psychological threshold after another failed run at the level.
Even as some optimism builds around the prospect of Bitcoin gearing up for a much broader rally, analyst Joao Wedson has warned that the risk of a deeper decline remains firmly in place.
Wedson pointed to the liquidation levels below $57,000 as a major concern, arguing the unliquidated longs stacked there could trigger a massive liquidation event and force Bitcoin lower.
He noted a similar pattern in 2022, when the price plunged one final time before finding its bottom, a sequence he expects could repeat for Bitcoin. Even while flagging those concerns, Wedson maintained the market still holds opportunity for investors.
If another large liquidation event comes, it could create one of the most interesting opportunities to position.
He explained these types of liquidation events have historically marked some of the best places to accumulate an asset, given the strong odds of a subsequent market rebound.
Bitcoin demand stays weak
Demand for Bitcoin does not yet look strong enough to support a bullish rally, with accumulation staying thin over an extended stretch.
The spot market netflow shows buying over the past 30 days has run well below what a bullish market, one driven by heightened accumulation, would typically produce.
Bitcoin’s spot netflow recorded -$412 million, marking net accumulation as coins left exchanges, though the figure stays modest by market standards, and over the past 50 days the netflow has peaked at only -$1.10 billion.
Minimal accumulation of this kind signals a thin appetite for buying Bitcoin, a dynamic absent when an asset trades in genuine bull-run conditions.
Over the past 15 days, Bitcoin netflows totaled $182 million in sell‑offs. Moreover, negative netflows indicate net buying as coins move off exchanges, while positive netflows reflect heavier selling as assets shift onto exchanges.
Bitcoin exchange balances climb
The bigger concern right now is Bitcoin’s balance across exchanges, which has been climbing. At press time, Exchange Reserves have trended higher, with the total balance held on exchanges reaching 2.71 million $BTC at the latest reading.
A rise in Exchange Reserves usually means traders have moved more Bitcoin onto exchanges, placing the asset in a selling position, since higher exchange balances reflect a growing readiness to sell.
For now, the setup keeps Bitcoin exposed to further downside over the next couple of days.
Final Summary
- Analyst warns that unliquidated longs below $57,000 could trigger a large liquidation event and drag Bitcoin lower, while creating a prime accumulation window.
- On-chain data backs the caution, with thin spot accumulation over 30 and 50 days and climbing exchange reserves at 2.71 million $BTC.
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