Bitcoin recovered from its sideways trading at the start of the week, surpassing $57,000 for the first time since December 2021.
Bitcoin's advances continued on Wednesday, reaching intraday highs of $57,790 at press time. The flagship cryptocurrency's price last increased by 3.27% to $57,746, according to CoinMarketCap data.
Bitcoin (BTC) is facing a critical test on its path to recovering its all-time high of $69,000, set in November 2021. According to IntoTheBlock data, 1.49 million Bitcoin addresses purchased 432,920 BTC at prices ranging from $56,961 to $67,413, with an average of $60,330.
This represents approximately 3% of Bitcoin holders who may look to sell once Bitcoin reaches its breakeven price, resulting in selling pressure.
In the case of a BTC price correction, the next key support lies between $55,134 and $56,961, where 513,730 BTC were bought by 991,220 addresses at an average price of $56,036, per IntoTheBlock data.
However, the danger of massive liquidation looms if Bitcoin loses the $56,000 level. According to Ali, who cited Coinglass's Bitcoin liquidation heatmap, $300 million worth of long positions are at risk of being liquidated if BTC falls to $55,900.
This scenario may cause a cascade impact, as liquidations can increase selling pressure and drive the price lower.
Bitcoin, the first and largest cryptocurrency, has added $800 billion to its market capitalization since Jan. 1, 2023. Bitcoin's market capitalization was around $320 billion at the beginning of 2023 and has since grown to $1.13 trillion, making it the world's tenth-largest asset.
Bitcoin is now less than 20% of its all-time high of $68,982.20, set in November 2021. Investors expect it to achieve a new record after the launch of ETFs and the network's forthcoming halving event, which has traditionally laid the groundwork for a significant surge in the months that follow.