Bitcoin Price Crash: What’s Next for $BTC After Major Sell-Off?

Bitcoin Price Forecast: Impact of MicroStrategy’s Holdings on Market

Bitcoin Price Dump to $86K – What’s Next for BTC?

Bitcoin has taken a big hit this week dropping to $86,000 for a short time before bouncing back a bit. The top crypto coin can't seem to hold onto key support levels falling under $88,500 and losing over 7.46% in a week. This has created doubt in the wider crypto world, with traders watching prices for possible big swings.

Institutional Sell-Off: Bitcoin ETFs Witness Record Outflows

The main reason for this slump is money leaving U.S. Bitcoin spot Exchange-Traded Funds (ETFs). On Tuesday, these ETFs saw the biggest one-day net outflow ever losing a whopping $1.01 billion. This makes six days in a row of money going out showing that big investors are less sure about Bitcoin's price staying steady in the near future.

In just the last day, about 110,479 traders have had their positions closed, with total forced closures hitting $416.63 million. The biggest single forced closure happened on HTX involving a BTC-USDT trade worth $39.62 million.

Bitcoin Faces Critical Support Levels

Bitcoin's price has dropped below $93,198 prompting market watchers to warn about a potential "air gap." This means there's not much solid price support until Bitcoin reaches $70,440.

Some market experts have spotted similarities between Bitcoin's current trajectory and the market high of 2021. This has led to worries that Bitcoin might go through a long period of price stability before its next big move.

Tuesday’s sharp decline sent Bitcoin 16% below its all-time high (ATH), exceeding this cycle’s average drawdown of 8.54% but remaining below the maximum drawdown of 26.25%. This data suggests that while the correction is significant, it has yet to reach the extremes seen in previous market cycles.

MicroStrategy’s Bitcoin Holdings: Risk or Opportunity?

As Bitcoin continues to plunge, speculation about MicroStrategy's giant BTC stash has intensified. MicroStrategy's stash now totals 499,096 BTC, worth approximately $43.7 billion, currently at an average price of $66,350 a coin. 

Despite MicroStrategy’s stock (MSTR) plummeting by over 55%, analysts suggest that a forced liquidation remains unlikely. The Kobeissi Letter highlights two primary risk factors: a prolonged and severe BTC decline below $66,000 and the company’s ability to secure additional capital. Thus far, MicroStrategy has navigated multiple Bitcoin price crashes since 2020 without selling any of its holdings.

Long-Term Holders Accumulate Bitcoin Amid Sell-Off

Despite significant sell-offs, Long-term holders are believed to have accumulated approximately 20,400 BTC during this latest turndown of markets cementing good faith among veterans in the industry of a possible resurgence for Bitcoin and continued improvement thereafter.

BTC Price Prediction: Will BTC Bounce Back or Fall to $85k?

Technical indicators are battling each other in a contradictory way. It broke down sharply on Monday to close below some key support around $94K and finally settled below $91.5K. Tuesday was similarly bearish, making a low of $85,953 before managing a slight recovery to $89,000 by Wednesday.

The RSI slipped down to 32 on the daily chart and was approaching oversold territory, potentially indicating a reversal. However, traders proceed with caution as no stabilization can occur just yet if there is any continuation to the downside. 

If Bitcoin receives further momentum down, it might look for the next major support level at $85,000. If BTC regains bullish momentum, it might test that psychological $100,000 resistance again.

While Bitcoin struggles with uncertainty across the market, institutional flows, macroeconomic conditions, and investor sentiment will remain the focus of investors in the coming weeks.