Bitcoin experienced a significant drop on August 5, reaching a multi-month low of $49,105, as the ongoing crypto sell-off continued. At its lowest point, Bitcoin was down by over 33% from its highest point this year. Although it did recover slightly to test the $55,000 level, it remains in a deep bear market.
The prediction market is divided on what to expect for Bitcoin later this year. According to Kalshi, a prediction platform supported by Charles Schwab, Sequoia, and Henry Kravis, 76% of poll participants anticipate that the Bitcoin price will finish the year below $50,000. Of those participants, 54% believe the coin will fall below $40,000, while 20% expect it to drop below $30,000.
In contrast, fewer traders on Polymarket anticipate Bitcoin rising to $100,000 this year. In March, 64% of poll participants predicted the coin would reach that level, but on Monday, the figure dropped to 22%.
The cryptocurrency industry is facing significant challenges, resulting in the decline of Bitcoin and other cryptocurrencies. Recent data shows that spot Bitcoin ETFs lost over $65.4 million in assets. Bitcoin’s futures open interest also decreased from a high of over $8.8 billion to over $6.2 billion. Furthermore, Bitcoin experienced $444 million in liquidations on Monday, contributing to the industry’s total of over $1.14 billion.
Despite these setbacks, major investment firms like Blackrock, Fidelity, and MicroStrategy have not been selling their coins. In fact, MicroStrategy is actively raising funds to acquire more coins.
Another potential positive development is the possibility of the Federal Reserve cutting interest rates even before the September meeting, as it did in March 2020. Inflation has been decreasing while the unemployment rate has risen to 4.3%.
When analyzing Bitcoin’s price technicals, the data presents a mixed picture. On the daily chart, Bitcoin reached a peak of $73,955 and then declined to $49,104 on August 5. Its lowest point coincided with the highest point on January 11, making it a significant level. Bitcoin also fell below the 200-day moving average, indicating that bears are currently in control.
A crucial factor to note is that Bitcoin has been forming a series of lower highs ($73,900, $72,000, and $70,000) and lower lows ($60,730, $56,900, and $50,775). This price action often leads to further downward movement.
On a positive note, Bitcoin has formed a falling broadening wedge pattern, which is a popular bullish sign. If it rises above the 200-day moving average and surpasses the upper side of the descending trendline, it would confirm more upside potential. Conversely, if it drops below Monday’s low, it would invalidate the wedge pattern and indicate further downside, with sellers targeting the 50% retracement level at $44,840.
As Bitcoin falls below $50,000, concerns arise about a potential black swan event impacting the crypto market.