On August 5, Bitcoin’s price plummeted to a multi-month low of $49,105, continuing a significant sell-off in the cryptocurrency market. At this nadir, Bitcoin (BTC) had dropped over 33% from its peak earlier this year. Although it managed to recover briefly, testing the $55,000 mark after dipping below $50,000, the cryptocurrency remains entrenched in a pronounced bear market.
Market predictions for Bitcoin’s future this year are mixed. A recent survey conducted by Kalshi, a rapidly evolving prediction platform supported by notable investors such as Charles Schwab, Sequoia, and Henry Kravis, revealed that 76% of respondents anticipate Bitcoin will end the year below $50,000. Additionally, 54% believe the price could plunge beneath $40,000, while 20% expect it to fall below $30,000.
Conversely, Polymarket indicates a dwindling optimism regarding Bitcoin reaching $100,000 this year. In March, 64% of participants projected that the cryptocurrency would achieve that milestone, but this optimism has since diminished to just 22% as of Monday.
The decline in Bitcoin and other cryptocurrencies can be attributed to significant challenges facing the industry. Recent reports indicate that spot Bitcoin ETFs have seen a loss of over $65.4 million in assets. Furthermore, Bitcoin’s futures open interest has decreased to over $6.2 billion, down from a peak of more than $8.8 billion last month. On Monday alone, Bitcoin experienced $444 million in liquidations, contributing to a staggering $1.14 billion in liquidations across the entire market.
Nevertheless, some large investment firms, including Blackrock, Fidelity, and MicroStrategy, have maintained their positions and are not offloading their Bitcoin holdings. In fact, MicroStrategy is actively seeking to raise funds to acquire more coins.
In a development reminiscent of March 2020, the Federal Reserve might consider cutting interest rates ahead of the September meeting, as inflation continues to decline and the unemployment rate has risen to 4.3%.
From a technical perspective, Bitcoin’s price movements are generating mixed signals. An analysis of the daily chart shows that Bitcoin reached a high of $73,955 before descending to $49,104 on August 5. This recent low coincides with a critical resistance level from January 11. Moreover, Bitcoin has dipped below the 200-day moving average, indicating that bearish sentiment is prevailing.
Critically, the cryptocurrency has been forming a series of lower highs ($73,900, $72,000, and $70,000) alongside lower lows at $60,730, $56,900, and $50,775. Generally, such price patterns suggest a further downward trajectory.
On a more optimistic note, Bitcoin has established a falling broadening wedge pattern, which is often seen as a bullish indicator. Should the price rise above the 200-day moving average and break through the upper boundary of the descending trendline, it could signal a potential reversal. However, a drop below the recent low would invalidate this wedge pattern and signal further declines, with sellers likely targeting the 50% retracement level at $44,840.