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Crypto traders appear to agree that today’s market rout is far from over.
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Bitcoin (BTC) tumbled below $50,000 during the early Asian trading hours on Aug. 5 as risk-off sentiment gripped global markets. Bitcoin is down nearly 31% over the last three days in a “once in a 7-10 yr event” that has left analysts with mixed opinions on whether BTC will recover in the short term.
Bitcoin’s drop below $50,000 has seen more than $500 billion wiped out of the crypto market in just 24 hours, accompanied by the liquidation of many leverage positions.
According to data from Coinglass, approximately $1.08 billion worth of leverage positions have been liquidated across derivatives markets, with long liquidations accounting for 74% of these, at $803.76 million.
Over the same period, more than $404.63 million worth of Bitcoin positions were liquidated, of which $282.81 million were long liquidations.
The market has mixed opinions about a Bitcoin price recovery
The current correction in Bitcoin price comes against a backdrop of numerous factors, including weak US economic and jobs data on Aug. 2 that ignited recession fears and rising tensions in the Middle East.
‘Have we been hit by the perfect storm?” QCP analysts said in an Aug. 5 post on X.
Independent trader Bob Loukas referred to this as a “once in a 7-10 yr event,” which makes it difficult to tell which move the market will take immediately after such a drawdown.
Loukas is of the opinion that that correction may go on until mid-September, with a good rally at some point. “Will just look like a deeper cycle pullback by the end of it,” he added.
Fellow analyst McKenna warned Bitcoin investors not to expect a sharp recovery in the short term, adding that the market could move “sideways for 1-2 months.”
“This isn’t a v-bottom scenario. I believe the value will remain cheap for some time and enter an accumulation market phase.”
Michael van de Poppe, the founder of MN Capital, took a more neutral stance, saying the ongoing correction in BTC’s price could either define the cycle’s bottom or initiate the start of a “big crisis.”
“It’s binary. Either V-Shape back up, and it’s going to rotate towards $BTC as a safe haven alongside Gold and $ETH, taking over with DeFi as the safe haven for banking systems.”
If a V-shaped recovery scenario plays out, BTC could rise sharply over the next few days, rising 32% to retest the $70,000 level. The relative strength index (RSI) is in the oversold region at 28, suggesting that the downward momentum could soon run out of steam, leading to a recovery if bulls begin to buy on the dips.
Related: Bitcoin analyst sees seller ‘exhaustion’ as BTC price rebounds 10%
Analysts target $40,000 Bitcoin
The ongoing market correction has left market participants wondering how low Bitcoin price can go before a trend reversal occurs.
CryptoQuant founder Ki Young Ju set the lower target within the $45,000 to $55,000 demand zone, which is the cost basis of “mining companies” and “Binance traders,” respectively. Traders’ cost basis has been known to support prices during bull markets.
Young Ju warns that if the price drops below this demand zone, it will confirm a bear market, as it did in November 2018, March 2020, and May 2022.
For popular analyst Scott Melker, Bitcoin’s price could drop below $45,000 before September.
“Polymarket traders are betting that Bitcoin will continue to drop, predicting a 45% chance it will fall below $45,000 before September. This sentiment spiked to 65% during early European trading hours amid many liquidations,” Melker said in an Aug. 5 post.
Continuing, Tuur Demeester, a Bitcoin analyst, spotted BTC trading just above $51,000, saying that the $45,000 to $40,000 demand zone could be a technical downside target for BTC.
This article first appeared at Cointelegraph.com News
