A popular crypto analyst is issuing a warning that Bitcoin could suddenly collapse if BTC loses a key support level.
Crypto trader Ali Martinez tells his 104,000 followers on the social media platform X that Bitcoin could plummet nearly 27% from its current value if it fails to remain trading above $93,806.
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The crypto analyst uses the Unspent Transaction Output (UTXO) Realized Price Distribution (URPD) model to determine the key support levels. UTXO keeps track of the number of existing coins that last moved within a given price range.
“From an on-chain perspective, a Bitcoin price correction to $70,000 is possible, understanding that below $93,806, it is pretty much open air all the way down to $70,085.”
The analyst believes some investors are suddenly preparing for a bearish trend by sending their BTC to exchanges for possible selling.
“Some savvy investors appear to be aware of such a bearish scenario, and they have sent over 33,000 Bitcoin to exchanges over the past week, valued at more than $3.23 billion!”
He also says other investors are already selling ahead of a possible collapse.
“Others are also booking profits. For instance, on December 23rd alone, more than $7.17 billion in Bitcoin profits were realized.”
He says bearish sentiment is further evident from a more than 13% decline in the number of traders betting on Bitcoin rallying using the top crypto exchange Binance.
“Moreover, the percentage of traders on Binance with open Bitcoin long positions recently dropped from 66.73% to 53.60%.”
For the bearish outlook to flip bullish, the analyst says Bitcoin needs to convincingly reclaim $100,000 as support on the daily chart based on the In/Out of the Money Around Price (IOMAP) metric.
The IOMAP classifies crypto addresses as either profiting, breaking even or losing money to determine support and resistance levels.
“Bitcoin recently broke below one of its most significant support zones at $97,300. So, for the bearish outlook to be invalidated, BTC must reclaim this critical area of support and, more importantly, sustain a daily close above $100,000!”
However, the analyst says a reignited Bitcoin rally could send the flagship crypto asset to $168,500 based on the Mayer Multiple, an oscillator that uses several ratios between price and the 200-day moving average.
“If Bitcoin can sustain a daily close above $100,000, we could be looking at a new leg up toward $168,500.”
Bitcoin is trading for $95,855 at time of writing, down 2.3% in the last 24 hours.
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