Fears about a deeper correction of the main cryptocurrency have been justified. The support of $60,000 per coin has been broken, and the head and shoulders reversal pattern has formed.

With such a technical picture, the potential for working out a figure is measured by the height of its head. But let's take into account the levels standing in the way. In this case, the targets for the decline will be in the area of 55,000 - 56,000, and if it passes from top to bottom - in the area of 52,000 dollars per coin.

The consequences of the collapse

Today, the capitalization of the entire cryptocurrency market has decreased by more than $210 billion. The sudden crash resulted in over $850 million in long and short positions on leading cryptocurrency derivatives trading platforms.

What triggered the fall

While it looks like the correction may be over, there are several signals indicating a deeper correction. The estimated leverage ratio on cryptocurrency derivatives exchanges is about to hit an annual high.

This reason intensified the market collapse in May: positions with leverage with a slight decrease in prices are quickly taken out, and accounts are closed by a margin call.

Favorable funding rates of 0.1% or higher every eight hours are generally considered volatile. Higher rates suggest that market speculators are overly optimistic as traders who trade long pay to fund shorts (short traders). When this happens, traders can begin to experience so-called "euphoria" in their positions, which often leads to sharp corrections.

CrytoQuant data shows that the calculated leverage ratio of Bitcoin across all exchanges is hovering around 0.19%, which is a negative signal for a continuation of the upward trend.

Is the bullish trend lost?

It should be noted that the high level of leveraged positions is nothing new. This threat was discussed last week, although few people paid attention to it. But then, favorable ETF news pushed the price up uncontrollably.

Funding rates across all derivatives trading platforms may need to be normalized in order for the market to continue a healthy bullish move. And while the rally could continue without a drop in funding rates, an event similar to today's sudden collapse could occur in the market.

So far, in my opinion, you should still focus on technology. Let's see how today's daily candle closes. And even if the breakout of the neckline of the reversal pattern turns out to be false, in the coming days, consolidation below $60,000 per coin is likely to occur.

This means that the main cryptocurrency will go to at least $55,000 per coin.