Bitcoin (BTC) Might Retest Support Around $48,900 as a Potential Local Bottom

Bitfinex analysts opined that Bitcoin might retest support around $48,900 as a potential local bottom after crypto markets dropped under $2 trillion.

Bitcoin (BTC) price dropped below crucial support levels on Aug. 4 as a broader crypto market sell-off led to over $570 billion in losses. But Bitfinex analysts highlighted that Bitcoin could still retest lower support as a potential local bottom.

After plunging under $50,000, Bitcoin price might revisit support if bullish momentum remains unavailable.

Bitcoin price dropped to as low as $48,920 on Aug. 4, marking a nearly 10% decline from the day’s opening price. The last time BTC price dropped below $49,000 was on July 20, and the asset quickly recovered to trade above $50,000 the following day.

However, as the latest downswing came amid a broader market sell-off, sustained buying pressure might be crucial to prevent Bitcoin price from dropping further.

As a leading crypto asset, Bitcoin’s price movements also had an impact on the broader cryptocurrency market. With BTC dominance rising as high as 60% at the time of writing, the top asset made up the majority of the market.

Hence, further declines in BTC price could also lead to dips across the broader crypto ecosystem.

According to data from CoinGlass, BTC’s 24-hour decline already triggered over $1.2 billion in crypto liquidations. Among the large cryptocurrencies, BTC had the highest liquidation volume at $444.3 million, followed by Ether (ETH) at $233.3 million.

Related: Bitcoin price drops below $50K as crypto markets shed $570B —はどこに向かうのか

Global recession fears drag BTC price down to $49,000 in a historically challenging month

As highlighted by Bitfinex analysts, global recession concerns dragged BTC price down to $49,000 during a historically challenging month for cryptocurrencies.

According to the analysts, BTC tends to experience seven “green months” followed by seven “red months” in terms of price performance. But 2023 began with seven months of losses, making it the worst year for BTC since 2018.

“This downturn was largely driven by tightening monetary policies, rising inflation, and the collapse of several major crypto projects, including Three Arrows Capital (3AC), Celsius Network, and FTX,” the analysts noted.

Bitcoin’s bounce and possible next move in sight

Despite starting Aug. 5 with double-digit losses, BTC had retraced nearly 50% to the upside and traded over $54,500 at press time.

Depending on macroeconomic developments, IntoTheBlock data suggests that gathering strength between $47,800 and $57,800 is crucial for Bitcoin.

Wharton professor calls for an emergency rate cut in response to the global liquidity crisis

As highlighted by Bitfinex analysts, the latest crypto market sell-off was not caused by on-chain factors or technical reasons.

“The crash was primarily, if not entirely, driven by macroeconomic factors. It was triggered by the Bank of Japan’s carry trade crisis, the disappointing US employment report, and a rise in unemployment,” the analysts noted.

However, several experts and commentators continue to call for measures to support the crypto market and broader economy.

As an example, Wharton professor Jeremy Siegel called for an emergency rate cut from the U.S. Federal Reserve in response to the ongoing global liquidity crisis.

“The Fed should cut rates now. We have a liquidity crisis around the world. Everyone is talking about a recession. We are in a recession,” Siegel said.

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