Will Bitcoin Price Recover After $1.7 Billion Liquidation Event?

Highlights,Bitcoin (BTC) price has slipped below key trend line, suggesting the end to the short-term consoldiation. This drop signals the start of a correction and is likely to take BTC much lower before a recovery rally emerges. Let’s take a look at technicals, futures data and on-chain metrics to see what Bitcoin might do next.,Before we step into any aspect of our analysis, let’s explore why Bitcoin crashed.,During a raging bull run, the leverage present in the ecosystem climbs higher. This is true even in the traditional markets. With cryptocurrencies, this is dialied up to an eleven. As a result, when Bitcoin price slide 6% on late Monday, it caused altcoins to hemmorhage, triggering a flurry of liquidations due to the massive leverage. As a result of this cascade, the total liquidation reached a whopping $1.7 billion, according to data from CoinGlass.,The leverage is one of the key drivers of such a massive crash and liquidation event. However, Google’s announcement of Willow, a quantum chip, could have also added some tailwind to the crash, some speculate.,While Google’s new chip has made a huge step in advancing quantum chips, it is still far away from being a threat to Bitcoin’s encryption. Kevin Rose, former Google employee added,,Bitcoin’s four-week upsloping consolidation ended on December 9 after a 6.35% crash. This crash, albiet small, breached the inclined trend line, signaling an end to the consolidation and a potential start to the downtrend.,Currently, BTC sits on the $97,205 support level, a breakdown of which could trigger a crash to $94,875 and $92,514 support levels. While BTC has ended the four-week consoldiation, it is sitll bullish on the short-term. Howerver, a breakdown of $92,514 would flip this bias favoring bears. Regardless, investors need to keep a close eye on $90K, a key psychological level. A bounce here could trigger a recovery rally, but a failure from bulls to defend this level could trigger a steep correction to $86,621,So, will BTC recover? If the $90k to $92.5k support levels hold, Bitcoin price should kickstart a recovery rally.,The Open Interest data shows a decline from $65 billion on December 5 to $60 billion as of December 9. If the OI does not pick up moderately, then recovery bounce is unlikely to sustain.,The 30-day Market Value to Realized Value (MVRV) indicator shows that it is close to zero, suggesting that there are no unrealized profits. While this is a positive sign, it is not a great time to buy yet or expect a recovery. When the 30-day MVRV indicator dips to 6% to 13%, BTC price has reversed.,Hence, the Bitcoin price prediction hints that a short-term recovery is highly unlikely. The data from price chart, open interest, and on-chain metrics all suggest a similar hesitation – a BTC bounce here is not welcome. That said, investors need to be cautious not to FOMO as some altcoins are likely going to fly.,