As a seasoned crypto investor with a knack for navigating market turbulence, I can’t help but feel a familiar sense of deja vu as I watch Bitcoin plunge under $50,000 once again. The last time we danced this dance was just a few months ago, and here we are, tangoing to the same rhythm.
According to Bitfinex’s analysis, there’s a possibility that Bitcoin could test the level of $48,900 as a possible temporary low, should it reach this point, following a decline in the overall cryptocurrency market that fell below $2 trillion in value.
The leading cryptocurrency, Bitcoin (BTC), may dip to lower prices due to global economic instability, which has caused a loss of over $570 billion in the value of digital assets since August. If favorable momentum doesn’t return, analysts at Bitfinex predict that Bitcoin could retreat to its support level, even dipping below the $50,000 mark.
After the recent decrease in BTC value, Bitcoin’s dominance increased to around 60%. This means that more than half of the total market is made up of Bitcoin, making it the primary virtual currency. Consequently, further decreases in BTC price could lead to drops within the broader cryptocurrency market as well.
BTC’s 24-hour decline already triggered over $1.2 billion in crypto liquidations, per CoinGlass.
What’s driving the slump?
Worries about global economic downturn pushed Bitcoin’s price to around $49,000 in a particularly tough month for cryptocurrencies. Historically, Bitcoin has seen an average decrease of 7.8% in August and a drop of 5.5% in September.
Instead, Bitfinex analysts explained that the sudden decrease wasn’t due to on-chain activities or technical issues, but rather it was influenced by broader, macroeconomic factors.
According to analysts at Bitfinex, the recent crash can be largely attributed to broader economic issues, with key triggers being the Bank of Japan’s carry trade crisis, an underwhelming US jobs report, and an increase in unemployment rates.
Bitcoin’s bounce and possible next move
Initially, Bitcoin (BTC) experienced a 10% decline on August 5th. However, it recovered significantly, nearly halving its initial loss to trade above $54,500 at the time of reporting. According to IntoTheBlock’s data, it’s important for Bitcoin to regain strength between roughly $47,800 and $57,800 in light of ongoing macroeconomic trends.
Relaxed monetary strategies could potentially boost Bitcoin (BTC) and other cryptocurrencies. Experts like Wharton professor Jeremy Siegel are advocating for a sudden reduction in interest rates by the U.S. Federal Reserve due to the persistent worldwide cash flow issue.
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2024-08-05 20:01