Bitcoin (BTC), the world’s leading cryptocurrency, has recently witnessed a surge in price, reaching a new yearly high of $42,100 on Monday. However, this significant price increase has raised concerns among market participants about the possibility of a potential correction and a subsequent liquidation sweep, which could drive the price down to as low as $25,000.
Second Capitulation And Liquidity Sweep For Bitcoin?
Justin Bennett, a prominent technical analysis expert, acknowledges the remarkable performance of Bitcoin, stating, “It’s been a hell of a run from BTC, and it may very well continue without a significant correction in the short term.”
However, Bennett highlights that the previous two bear markets concluded with a second capitulation, suggesting the possibility of a similar scenario occurring this time. Bennet cautions against ruling out a liquidity sweep that could drive the price down to $25,000.
To provide further context, liquidity sweep refers to a sudden and drastic move in price that aims to clear out excess leverage and trigger liquidations of overleveraged positions.
Such a move could lead to a cascading effect, causing the price to drop further as more positions get forcefully closed. The occurrence of a liquidity sweep at the $25,000 level would not only test the resilience of Bitcoin but also serve as a crucial moment for market sentiment.
As seen in the 2-week chart above shared by Bennet, despite the potential correction in BTC, this could be the last difficulty that Bitcoin bulls experience before the continuation of the bull run; this will be further fueled by the potential approval of Bitcoin spot exchange-traded funds (ETFs) applications by the US Securities and Exchange Commission (SEC), which is expected to push prices even higher.
A boost from the halving of Bitcoin will further add to the bullish momentum and sentiment in the market, which could push the price of BTC to new all-time highs (ATH).
Additionally, historical trends indicate a promising outlook for Bitcoin. Analyst Ali Martinez points out that in the past, strong BTC performance during October and November has been followed by a bullish December. According to Martinez, market participants can anticipate a bullish December ahead if this pattern holds.
El Salvador’s BTC Investments Prove Profitable
El Salvador’s President Nayib Bukele recently announced that the nation’s investments in Bitcoin have yielded significant profits, refuting previous claims of losses made by critics.
President Bukele revealed that if El Salvador were to sell its Bitcoin holdings at the current market price, the country would not only fully recover its initial investment but also make a profit of $3,620,277.13.
Addressing the numerous articles and hit pieces that had ridiculed El Salvador’s Bitcoin investment strategy, President Bukele emphasized that these assessments were based on the cryptocurrency’s market price at the time of evaluation. With Bitcoin’s recent surge in value, the country’s investment has turned profitable.
While acknowledging that the price of Bitcoin will continue to fluctuate, President Bukele reaffirmed that El Salvador remains committed to its long-term strategy and has no intention of selling its Bitcoin holdings. President Bukele stated:
Of course, we have no intention of selling; that has never been our objective. We are fully aware that the price will continue to fluctuate in the future, this doesn’t affect our long-term strategy.
At the time of writing, BTC is trading at $41,200, reflecting a notable price increase of 3.8% over the past 24 hours and 12% over the past seven days.
Featured image from Shutterstock, chart from TradingView.com