The crypto market’s parabolic situation increased momentarily after Bitcoin lost the $58K support line.
The popular digital asset settled around $56,541, down more than 1% on Friday morning, and has decreased by 5% over the last week.
Coinglass data showed that 32,057 traders were liquidated for the day, with a total liquidation value of $84 million. The largest liquidation order ever was $2.1 million worth of BTCUSD on Bybit.
Analysts at Bitfinex have cautioned that Bitcoin may drop much further, partly due to the anticipated Federal Reserve interest rate cut.
They noted that while a 25-basis point reduction could help Bitcoin in the long run by boosting liquidity and alleviating recession concerns, a larger reduction might have the opposite effect on the price.
Arthur Hayes, a co-founder and former CEO of the cryptocurrency exchange BitMEX, stated on Friday that he believes Bitcoin will fall below $50,000 this weekend. He disclosed that he has bet on a downturn and taken a short position.
Market action revealed that after Bitcoin attempted to reach its 50% price retracement mark on Monday at $59,560 (derived from a peak in late July to a low in early August), the crypto asset was rejected and fell 5% over the following three days. It retested the daily support level at $56K.
If Bitcoin closes below the $56,022 daily support level, market pundits argue that it may drop 3.5% and retest the psychological $54,000 barrier. On the daily chart, the Awesome Oscillator (AO) and Relative Strength Index (RSI) momentum indicators are trading below their respective neutral levels of zero and fifty. The negative trend is expected to continue, as indicated by both signs of weak momentum.
Views on the severity of the correction vary. Top cryptocurrency researcher Moustache stated that the asset may bottom out at $57K. His prognosis is based on past fractal patterns that point to significant areas of support, resistance, and potential trend changes.
Investors short Bitcoin by borrowing it in an attempt to benefit from a decline in value, selling it, and then purchasing it again at a reduced cost to return it to the lender. 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 perspective aligns with 10x Research’s finding that the low $40,000 range represents an excellent entry point for the upcoming bull market.
Shorting allows investors to profit from a collapse in value if they believe Bitcoin is overpriced or anticipate one due to market trends or regulatory actions. Additionally, shorting can serve as a hedge against future market downturns for investors who hold long positions in Bitcoin.
Bitcoin Spot ETF Outflows Reach Highest Level Since May 1
Bitcoin spot Exchange-Traded Funds (ETFs) in the United States posted net withdrawals of $288 million on Tuesday, the highest amount since May 1.
BlackRock’s IBIT, the largest spot Bitcoin ETF by assets, experienced no notable daily flows, according to SosoValue data. $50.39 million was withdrawn from Grayscale’s GBTC, the second-largest spot Bitcoin ETF. The largest losses were suffered by Fidelity’s FBTC, which had withdrawals of $162.26 million. Other significant withdrawals included $33.6 million from Ark and 21Shares’ ARKB and $24.96 million from Bitwise’s BITB.
Lower outflows were observed from ETFs managed by Franklin Templeton, VanEck, Valkyrie, and Invesco.
