BTC has dropped below the previous support level of around $27,000 and is heading towards a new support level at around $25,000. The $25,000 level has been tested before in mid-March, February, and August 2022. There is also a possibility that BTC could drop below $25,000 and fluctuate somewhere in the range of $25,000 - $22,000.
The current decline may be due to rumors of the US government selling its holdings of BTC, and such rumors can cause investor sentiment to panic.
Is Bitcoin expected to recover when it drops to $22,000 - $25,000?
The ideal scenario is that the $22,000 - $25,000 range is a strong level for Bitcoin to recover, according to IntoTheBlock, as this area has a lot of liquidity. Many investors have purchased BTC at that price level. Some analysts believe that "the range from $22,000 to $25,000 could see institutional investor participation."
In addition, US inflation is at 4.9%, lower than expected. This creates an opportunity for the Fed to lower or even pause interest rates. A more lenient monetary policy could attract investment flows into risky assets, such as Bitcoin. However, it's possible that "big players" are waiting for BTC to drop to a lower price point before entering.
Therefore, there is a possibility that BTC will recover, but only after it drops further down to the sub-$25,000 range from its current price level. There's also a possibility that if the bearish side pushes the price below $22,000, it could lead to even stronger liquidation consequences.
