Key Points
- Bitcoin may retest support around $48,900 after the crypto market fell below $2 trillion.
- Global economic uncertainty and recession fears have contributed to the slump.
Analysts from Bitfinex suggest that Bitcoin could potentially revisit the $48,900 support level. This prediction comes after the cryptocurrency market value dipped below the $2 trillion mark.
Bitcoin, the leading crypto asset, could experience further drops. This is due to the ongoing global economic uncertainty which has erased over $570 billion from the digital asset value since the start of August. The lack of bullish momentum could push Bitcoin’s price under $50,000.
Bitcoin’s Dominance and Impact
Bitcoin’s dominance increased to 60% after the recent downturn. This means that Bitcoin constitutes the majority of the crypto market. Consequently, any further price drops could potentially affect the wider cryptocurrency ecosystem.
Bitcoin’s 24-hour decline has already resulted in over $1.2 billion in crypto liquidations, as reported by CoinGlass.
Factors Behind the Slump
The global recession fears have pulled Bitcoin’s price down to $49,000, making it a tough month for cryptocurrencies. Historically, Bitcoin has lost 7.8% and 5.5% in August and September respectively.
However, Bitfinex analysts attribute this sudden drop to macro-driven factors rather than on-chain or technical reasons. They cited the Bank of Japan’s carry trade crisis, disappointing US employment reports, and a rise in unemployment as the main triggers.
Bitcoin’s Potential Recovery
Despite starting August 5 with significant losses, Bitcoin managed to recover almost 50% and was trading over $54,500 at the time of reporting. According to IntoTheBlock data, Bitcoin needs to strengthen between $47,800 and $57,800 depending on macroeconomic developments.
Experts suggest that looser monetary policies could benefit Bitcoin and other cryptocurrencies. Notably, Wharton professor Jeremy Siegel called for an emergency rate cut from the U.S. Federal Reserve to address the ongoing global liquidity crisis.
