Bitcoin Recovers After Plunging Below $60K – Bears Still in Control
In recent trading sessions, Bitcoin experienced a notable rebound after briefly dipping below the psychologically significant $60,000 level. However, despite the recovery, bearish sentiment continues to dominate the market, keeping investors cautious.
Price Movement and Market Reaction
Bitcoin’s price recovered by over $3,000 after buyers successfully defended the $60,000 threshold during the weekend. This rebound pushed the cryptocurrency back above $63,000, driven partly by a wave of short-covering activity. According to data from CoinGecko, Bitcoin was trading around $62,700 on June 8th following its dip below $60,000 on June 6th — marking the first breach of this key support level since 2024. The correction followed one of the weakest phases Bitcoin has seen this year, with the asset plunging nearly $19,000 over a 10-day span and suffering a weekly loss of approximately 14.6%.
Factors Influencing the Downtrend
Several macroeconomic and market-specific factors contributed to the increased pressure on Bitcoin prices. The U.S. Department of Labor reported a May jobs increase of 172,000 (Nonfarm Payrolls), significantly surpassing the expected 85,000. Additionally, revisions to prior months’ figures added 93,000 jobs, reinforcing expectations that the Federal Reserve might maintain a tighter monetary policy for a longer duration.
Reflecting this shift, BNP Paribas revised its earlier forecast of stable interest rates, now projecting three Fed rate hikes starting in December. The bank cited ongoing inflation worries, strong labor market conditions, and geopolitical risks tied to the US-Iran conflict as justification for this outlook.
The heightened uncertainty led to rapid unwinding of leveraged positions. CoinGlass data revealed that within a single hour, more than $155 million in crypto long positions were liquidated, with total liquidations exceeding $1.7 billion over 24 hours. The selling intensified once Bitcoin fell below $60,000, causing the Crypto Fear & Greed Index to plunge to an eight-year low of 8 — indicating extreme market fear.
Institutional interest also waned amid the downturn. CryptoQuant reported an outflow of nearly $40 billion from the Bitcoin ecosystem as capital shifted into U.S. equities, specifically targeting large companies linked to artificial intelligence technology.
Adding to negative sentiment was the decision by Strategy, a major Bitcoin-holding company, to sell 32 BTC to cover preferred stock dividend obligations. Although this sale constitutes a tiny fraction of its approximately 840,000 BTC treasury, traders viewed it as a deviation from Strategy’s longstanding accumulation and holding strategy.
Potential Signs of Recovery
Despite the bearish backdrop, several indicators suggest that Bitcoin may be approaching a bottom. Strategy’s founder, Michael Saylor, hinted that the firm might resume its Bitcoin purchasing program, renewing some investor optimism.
Notably, crypto analyst Scott Melker observed unprecedented levels of losses being realized by short-term Bitcoin holders, pointing towards potential seller exhaustion. Melker’s data indicated the ratio of realized gains to losses for these holders reached an all-time low, with about 5.3 million BTC held by long-term investors now showing unrealized losses, surpassing levels last seen following the FTX collapse.
Additional on-chain analysis by analyst Seth highlighted that the proportion of Bitcoin holders in profit has fallen to a trendline historically associated with major market cycle lows. These metrics hint at a possible end to the recent selling wave.
However, not all experts are convinced that the worst is over. CryptoQuant contributor Darkfrost noted that realized losses since the October peak total around $174 billion, still below the $211 billion recorded during the 2022 bear market. He cautioned that if capitulation continues, further downside could follow.
Similarly, market commentator Ardi pointed out that retail investors have kept buying dips while larger players have been offloading during rallies — a pattern usually not indicative of a major market bottom.
Technical Analysis
Bitcoin’s price movement reflects a market moving out of oversold conditions rather than confirming a new bullish trend. CoinGecko’s 7-day chart shows a sharp fall below $60,000 on June 6th, followed by consolidation near $60,000 to $62,000 over the weekend, and a push above $63,000 by June 8th.
On the daily chart, despite this short-term rebound, Bitcoin remains below key exponential moving averages (EMAs) that define the broader trend — with the 20-day EMA at approximately $69,265 and longer-term EMAs (50-, 100-, and 200-day) ranging from about $72,844 to $79,753, signaling sustained downward pressure until these levels are reclaimed.
Momentum indicators provide a mixed outlook. The daily Relative Strength Index (RSI) recovered from a perilously low 15.5 to around 25.8 — its lowest since the COVID-19 crash in March 2020 — a level typically associated with panic selling and potential exhaustion.
Conversely, the MACD remains bearish, with the MACD line below the signal line and both in negative territory. Yet, the narrowing histogram suggests a possible easing of downward momentum.
Holding the $60,000 support level is critical. Maintaining this price floor could allow buyers to target the 9-day simple moving average near $65,300, and subsequently, the 20-day EMA close to $69,000 — which together constitute important resistance zones.
Failure to preserve support above $60,000 might reinforce bearish views articulated by Darkfrost and Ardi, potentially pulling Bitcoin down toward $58,500 and $56,000 as next support areas.
Outlook
Currently, Bitcoin appears to be recovering from a significant oversold state rather than confirming a bullish reversal. The sustainability of this rebound will likely hinge on whether buyers can regain control by pushing prices above critical moving averages and whether institutional capital will return following recent large outflows.
As the cryptocurrency market continues to navigate these dynamics amid complex macroeconomic pressures, investors are advised to remain vigilant and attentive to both on-chain data and broader financial developments.
This article reflects data and market conditions as of June 8, 2024. Cryptocurrency investments carry risk, and past performance does not guarantee future results.