Bitcoin Price Falls Short of Bottom, Targets Low $40K Range

Bitcoin (BTC) has experienced a dramatic crash recently, falling below the critical $50,000 level in early Asian trading hours on Aug. 5. The significant drop, driven by a “once in a 7-10 yr event,” has left investors and analysts divided on whether BTC will rebound shortly or stagnate for a prolonged period.

Market Carnage: The Numbers Speak

The plunge in Bitcoin’s price has wiped out more than $500 billion from the crypto market in just 24 hours, further exacerbated by the liquidation of numerous leverage positions. According to data from Coinglass, around $1.08 billion worth of leverage positions have been liquidated across derivatives markets. Notably, long liquidations accounted for 74% of these, amounting to $803.76 million.

Key Statistics:

• $1.08 billion in total leverage positions liquidated
• 74% of these were long liquidations worth $803.76 million
• $404.63 million worth of Bitcoin positions liquidated
• $282.81 million of which were long liquidations

Unprecedented Market Reactions

The factors behind this recent correction in Bitcoin include weak US economic and jobs data released on Aug. 2, which heightened recession fears, and increasing geopolitical tensions in the Middle East. Analysts at QCP posed the question, “Have we been hit by the perfect storm?” in an Aug. 5 post on X.

Expert Opinions on the Market Direction

Several market analysts have weighed in with differing views on the short-term trajectory of Bitcoin.

**Independent Trader Bob Loukas**: Loukas regards this correction as a “once in a 7-10 yr event” and opines the downturn might continue until mid-September. He anticipates a significant rally may occur during this period, saying, “Will just look like a deeper cycle pullback by the end of it.”

**Analyst McKenna**: McKenna advises Bitcoin investors not to anticipate a swift recovery, suggesting that the market could move “sideways for 1-2 months.” McKenna adds, “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 (Founder of MN Capital)**: Van de Poppe leans towards a neutral stance, suggesting the ongoing correction could either mark the cycle’s bottom or herald the onset of a “big crisis.” He remarked, “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.”

Possible Scenarios Ahead

If a V-shaped recovery takes place, BTC could rise sharply over the next few days, possibly surging 32% to retest the $70,000 level. The relative strength index (RSI) is currently in the oversold region at 28, suggesting a potential halt in the downward momentum, paving the way for a recovery if bulls begin to buy the dips.

For more insights on market analysis, check out CryptoQuant.

Potential Lower Targets

The ongoing market correction has prompted discussions regarding how low Bitcoin’s price may go before experiencing a trend reversal.

**CryptoQuant Founder Ki Young Ju**: Young Ju identified the lower target within the $45,000 to $55,000 demand zone, which is the cost basis for “mining companies” and “Binance traders.” Traders’ cost basis has previously been known to support prices during bull markets. However, Young Ju cautions that if the price falls below this zone, it could confirm a bear market, as observed in November 2018, March 2020, and May 2022.

**Popular Analyst Scott Melker**: In an Aug. 5 post, Melker noted, “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.”

**Tuur Demeester (Bitcoin Analyst)**: Demeester spotted BTC trading just above $51,000 and suggested that the $45,000 to $40,000 demand zone might be a technical downside target for BTC.

Conclusion

The recent crash in Bitcoin price has left both seasoned investors and analysts in a state of uncertainty. While there’s potential for a V-shaped recovery, the prevailing sentiment skews towards a more prolonged period of accumulation. As the market navigates through this correction phase, all eyes are on whether the $45,000 to $55,000 demand zone will hold or if BTC will tumble further, heralding a bear market.

Investors must conduct their own research and exercise caution given the volatile nature of the market. For those looking to dive deeper into the data and analysis, additional resources like Cointelegraph and reputable market analysts’ opinions can offer further insights.

This blog post does not contain investment advice or recommendations. Every investment and trade involves risk; make sure to conduct your research. Stay informed and make decisions based on thorough analysis.

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