Bitcoin Price Forecast: $60K in Sight as BTC Hits Bearish Target in Record Time

Bitcoin (BTC) is officially the most oversold it has been since August 2023 as the token dropped to a key daily support at $66,000 today.

The top crypto has shed 7.5% of its value in the past 24 hours alone, while it has accumulated a 27.5% loss in the past 30 days.

Trading volumes have jumped by 40% during this same period and currently account for 8% of its circulating market cap.

Meanwhile, weekly ETF netflows have swung to negative territory again after investors pulled out $545 million out of these vehicles yesterday. The result: BTC ETFs have seen $255 million in withdrawals in just three days, adding up to last week’s net outflows of $1.49 billion.

Another $1.4 Billion Worth of Longs Are Out

We predicted yesterday that BTC’s next target would be $66,000 after breaking a key support at $75,000. A sell signal at this level was the tell for bears, as this system flags decision candles at key levels that can be interpreted as high-probability setups.

BTC/USD Price Prediction (February 4) – Source: FXempire

What we did not anticipate was that this target would be reached in just a day. It took $1.4 billion in long liquidations in just 24 hours to get there. Traders are having a tough start this year, as over $6.6 billion has been wiped out of the futures market in the past week alone.

Daily volumes have surged to the highest on record on Binance’s spot market since November 21. Back then, this led to a technical rebound for BTC that pushed the top crypto from $83,500 back to $95,000 for a 14% gain.

If we get a similar rebound here, we will most likely retest the $75,000 area from below, as buyers will attempt to squeeze what is becoming a heavily one-sided “sellers” market.

Extremely Oversold RSI Sets Stage for a Massive Short Squeeze

We are still operating under a “sell” signal in the daily chart. However, the Relative Strength Index (RSI) has now dropped to its deepest oversold level since August 2023. This increases the odds of a technical rebound.

BTC/USD Daily Chart (Binance) – Source: TradingView

Interestingly, back when the RSI got this low, BTC had dropped from $31,000 to $25,000 for a 19.4% loss. Guess what happened next? Bitcoin started a 7-month rally that pushed it to a new all-time high at $65,000 for a 2.5x gain.

Is that what we can expect from this? There are certainly a lot of contrarian signals favoring a reversal at this point, and conditions are set for a short squeeze.

Fear and Greed Index Hits 11 For a Second Time in Three Months

First, the Fear and Greed Index is once again in “panic” territory at 11. When market sentiment gets this depressed, the “smart money” knows that the floor is either “in” already or nearby.

Crypto Fear and Greed Index – Source: CoinMarketCap

This prompts institutions and deep-pocketed players to pile in, causing a spike in the price that progressively flushes out bears out of their positions.

Secondly, we have seen open interest rise as prices have plummeted, meaning that short positioning has increased.

These are also conditions that favor a major reversal, as market makers know there’s a lot of liquidity standing by to be taken if prices get high enough to trigger a “critical mass” of short-covering.

We can still go lower from here, possibly eyeing the $60,000 level next if the downtrend persists. However, the lower BTC goes, the more dramatic the squeeze might be, as we are already testing the boundaries of a healthy correction.