The cryptocurrency market is currently dumping, with Bitcoin (BTC) leading the dump. Concerns about a possible recession in the United States have led many to pull out of crypto assets, causing a widespread sell-off.
Bitcoin dumps 10% in just one day, raising questions about whether it might dip below the $50,000 mark.
The Reason Bitcoin Dumps 10%
This dump follows a major crash in U.S. markets, which has impacted markets around the globe. Asian and European markets have also been affected, turning bearish overnight and contributing to the continued sell-off in the crypto market.
As of now, Bitcoin is trading below $54,000, with Ethereum falling below $2,350. The fall in other cryptocurrencies has been even more pronounced, leading to concerns about whether this trend will persist in the coming days.
On a technical level, Bitcoin’s price trend is under stress. The daily chart shows that Bitcoin has been rapidly declining from its peak of $70,000, resulting in four straight bearish days and an overall 18% drop. The current price hovers around $52,569, with a 7.73% drop within a single day, forming a large bearish candle.
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This trend has pushed Bitcoin below all key Exponential Moving Averages (EMAs) at 50, 100, and 200 days, with a bearish crossover between the 50-day and 100-day EMAs. The daily Relative Strength Index (RSI) has also fallen into the oversold zone, reflecting growing selling pressure.
According to Coinglass data, liquidations are escalating, with nearly $700 million worth of positions liquidated in just the last 12 hours, including $569 million in bullish positions. This suggests that the market crash may not be slowing down anytime soon.
The U.S. market decline has been a major factor in this global downturn. The tech-heavy Nasdaq index has dropped nearly 10% over the past three weeks, with a 3.4% fall last week alone. This marks its worst three-week performance since September 2022. The U.S. market’s drop can be traced to several factors, including a weaker-than-expected jobs report, rising unemployment, and a slowdown in the manufacturing sector.
Additionally, the U.S. Federal Reserve’s decision not to cut interest rates in its recent Federal Open Market Committee (FOMC) meeting, along with no promise of rate cuts in September, has also contributed to the crypto market crash. Lower interest rates have historically been linked with better performance for Bitcoin, so the continuation of current rates has added to the market’s troubles.
This has had a ripple effect across global markets. Asian markets, particularly Japan’s Nikkei 225, have seen large declines, dropping as much as 11% with a 15% fall over the last three weeks. The index is now down nearly 30% from its all-time high.
The situation has been made worse by the Bank of Japan’s decision to raise interest rates to the highest level in 16 years, which has further fueled the sell-off among Japanese crypto holders. In India, the NIFTY 50 index, which tracks the top 50 stocks, has also seen a drop of 3% today and nearly 4.5% from its all-time high.
As Bitcoin currently trades below $53,000, there is a concern that it could fall below $50,000, especially if the current market conditions persist. The rising number of liquidations and increasing fear, uncertainty, and doubt (FUD) suggest that further declines are possible. However, there remains a possibility that the market could stabilize and that the crypto sector might lead a recovery if broader global markets find a base.
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