Bitcoin faces a potential sharp drop to $72,000 if it fails to maintain its crucial $100,000 support level, according to on-chain analytics firm CryptoQuant.
The warning comes after the price of Bitcoin briefly fell below the $100,000 mark for the first time since June on Tuesday.
Julio Moreno, head of research at CryptoQuant, said:
"If the price doesn't manage to hold the ~$100,000 area and breaks downwards, there are higher risks of targeting $72,000 in a one- to two-month period."
Moreno attributes the pressure to a severe and ongoing contraction in demand. This trend began with the historic liquidation event on October 10, which wiped out more than $20 billion in leveraged positions.
Moreno explained:
"Since then, spot demand for bitcoin has been contracting."