The cryptocurrency market experienced a brief surge after Bitcoin dropped below the $58,000 support level. The popular digital asset settled around $56,541, a decrease of more than 1% on Friday and a 5% drop over the last week. Coinglass data revealed that 32,057 traders were liquidated on Friday, with a total liquidation value of $84 million.
The largest liquidation order was $2.1 million worth of BTCUSD on Bybit. Analysts at Bitfinex warned that Bitcoin could drop further, partly due to the expected Federal Reserve interest rate cut. They suggested that a 25-basis point reduction could benefit Bitcoin in the long run, boosting liquidity and easing recession concerns. However, a larger reduction might have the opposite effect on the price.
Arthur Hayes, co-founder and former CEO of BitMEX, predicted that Bitcoin would fall below $50,000 over the weekend, revealing that he has taken a short position on this outcome. Market activity showed that Bitcoin attempted to reach its 50% price retracement mark at $59,560 on Monday but was rejected and subsequently fell 5% over the following three days, retesting the daily support level at $56,000. If Bitcoin closes below the $56,022 daily support level, some experts believe it may drop 3.5% and retest the $54,000 barrier.
On the daily chart, the Awesome Oscillator (AO) and Relative Strength Index (RSI) are below their respective neutral levels, indicating a negative trend is likely to continue. Opinions on the severity of the correction differ. Top cryptocurrency researcher Moustache suggested that the asset may reach a bottom at $57,000, based on past fractal patterns. Some investors are shorting Bitcoin, hoping to profit from a decline in value.
Price action indicators suggest that a 20% decline in Bitcoin’s value would bring it below $46,000, a level not seen since February 8. This aligns with 10x Research’s finding that the low $40,000 range is an excellent entry point for the upcoming bull market.
Bitcoin spot Exchange-Traded Funds (ETFs) in the United States experienced net withdrawals of $288 million on Tuesday, the highest amount since May 1. The largest losses were suffered by Fidelity’s FBTC, which had withdrawals of $162.26 million, and Grayscale’s GBTC, with withdrawals of $50.39 million. Lower outflows were observed from ETFs managed by Franklin Templeton, VanEck, Valkyrie, and Invesco.