Bitcoin (BTC) Market Reset Could Be Setting the Stage for a Price Recovery

Bitcoin's market has seen a major reset, with over $10 billion in open interest wiped out in just two months, leading analysts to believe that a Bitcoin price recovery is imminent.

Bitcoin’s market has seen a major reset, with over $10 billion in open interest wiped out in just two months, leading analysts to believe that a Bitcoin price recovery is imminent.

According CryptoQuant analyst Darkfost’s latest market analysis post on X, on Jan. 17, Bitcoin’s (BTC) open interest hit a record $33 billion, signaling extreme leverage in the market. However, political uncertainty tied to former U.S. President Donald Trump’s recent actions led to a wave of liquidations.

Subsequently, nearly $10 billion in open interest vanished between Feb. 20 and Mar. 4. This sharp decline pushed Bitcoin’s 90-day futures open interest change down to -14%, often signaling market resets before price recoveries. Analysts believe that eliminating excessive speculation, these stages provide a more stable basis for future growth.

Bitcoin’s long-term outlook is still optimistic despite the decline. According to economist Timothy Peterson, April and October are usually when Bitcoin experiences the biggest seasonal gains. Peterson’s most recent analysis reveals that Bitcoin might hit new all-time highs before June, with a median target of $126,000.

Bitcoin is trading near the low end of its historical seasonal range.

Nearly all of Bitcoin's annual performance occurs in 2 months: April and October.

It is entirely possible Bitcoin could reach a new all-time high before June. pic.twitter.com/p8upTNAkKH

— Tim Peterson (@timonomics) March 14, 2024

In addition, his “Lowest Price Forward” model, which estimates a price level that Bitcoin is unlikely to drop below in future trading, indicates that Bitcoin’s price floor has now risen to $69,000, with a 95% chance of holding. Past bull markets have shown that corrections like Bitcoin’s recent 30% pullback often precede strong rebounds.

However, not all analysts are fully bullish. Benjamin Cowen, founder of Into The Cryptoverse, warned on a Mar. 15 YouTube stream that Bitcoin’s bull cycle could be in jeopardy if it drops below the 2024 highs, which is in the lower $70,000s. Cowen compares the current cycle to 2017 when Bitcoin retested the prior year’s high.

He suggests the bull market might be over if Bitcoin closes in the low $60,000s. Additionally, according to Cowen, holding above $70,000-$73,000 would maintain the market’s structure. Bitcoin may signal a macro lower high later in the year if it drops below this level, which could result in a more bearish outlook by Q3.

Bitcoin is still in a crucial consolidation phase, with its current price at $82,900 at the time of press. If past trends hold, this reset could pave the way for another strong rally in the coming months.