The tricks of leverage in Bitcoin: a fall to the $70k before recovery?

The Bitcoin market continues to face liquidation pressures that could drive prices significantly lower, warns James Check, a well-known crypto analyst who has been closely monitoring recent volatility. With an current price of $70.58K (reflecting a -3.08% drop in the last 24 hours), the cryptocurrency remains in turbulent territory where excessive leverage remains a critical factor that could determine the next price move.

According to Check’s analysis, although much of the leveraged speculation has already been removed from the market, there are still “last holdouts” whose positions could trigger a new wave of downward pressure. The market’s sophistication, he notes, has the ability to detect and liquidate these remaining exposed leveraged positions.

The cascading liquidation risk: how low could leverage go?

The collapse Bitcoin experienced at the end of 2024 was identified as a “2-sigma liquidation event,” a significant move that massively cleared speculative positions. Such statistically extreme events can wipe out billions in speculative value within days.

During that period, Bitcoin lost over $24,000 in just ten days, reaching lows unseen in months. Now, with prices in lower territory, James Check warns that a new panic zone could materialize between $70,000 and $80,000 to “clear the last pockets of leverage resisting closing positions.”

“It wouldn’t be surprising if the market revisits the $70k-$80k zone to liquidate the laggards in leverage,” suggests the analyst, pointing out that the market has not yet fully eliminated speculative pressures.

Technical signals suggest a local bottom, but with uncertainty

Augustine Fan, head of analysis at crypto trading platform SignalPlus, offers a somewhat optimistic view of the technical scenario. According to his assessment, markets show signs of extreme oversold conditions from both sentiment and technical analysis perspectives (particularly Bollinger Bands are indicating extreme levels).

“The prices have probably reached local lows for now, unless new stress factors (such as forced liquidations of institutions) change the outlook,” comments Fan. The analyst expects sideways movements within a trading range between $82,000 and $92,000, with significant support around $78,000.

However, any sustained break below those levels would open the door to “considerable further declines,” though that is not the primary scenario currently considered by the market.

On-chain data reveal institutional redistribution and structural weakness

CryptoQuant analysts, a leading blockchain data provider, have identified signs that could confirm a local bottom. Analyst Carmelo Alemán highlights that “on-chain data show a market shaped by institutional redistribution, structural weakness, and potential rebound signals that could indicate the establishment of a local floor.”

However, there is a crucial complicating factor: the group of whales holding between 1,000 and 10,000 BTC continues to distribute their holdings, preventing full confirmation of the trend reversal many traders are waiting for.

“The recovery shows promise, but for the bearish phase to definitively end, a clear change in the behavior pattern of these institutional whales is required,” Alemán states.

This institutional distribution phenomenon suggests that although local prices may have found a temporary bottom, confirmation of a sustained trend reversal remains conditional on large holders halting their sales and changing their direction.