Bitcoin (BTC) fell below $50,000 in early Asian trading on August 5, as global markets took a hit on risk aversion. Bitcoin has fallen nearly 31% over the past three days in a “once in seven to 10 years” event, and analysts are divided on whether BTC will recover in the short term.
Over $500 billion was wiped out of the cryptocurrency market in just 24 hours as Bitcoin fell below $50,000, causing many leveraged positions to be liquidated.
According to data from Coinglass, approximately $1.08 billion worth of leveraged positions were liquidated across the derivatives markets, of which long liquidations accounted for 74%, or $803.76 million.
During the same period, $446.3 million worth of Bitcoin positions were liquidated, of which $282.81 million were long liquidations.
The market is showing mixed opinions about the Bitcoin price recovery.
The current Bitcoin price correction comes amid a combination of factors, including recession fears following weak U.S. economic and jobs data on August 2, as well as rising tensions in the Middle East.
“Are we caught in a perfect storm?” QCP analysts wrote on X on August 5.
Independent trader Bob Lucas calls it a “once-in-seven-to-10-year event,” meaning it’s hard to tell what the market will do immediately following such a decline.
Lucas thinks the correction could last until mid-September, with a nice rally at some point. “It’s going to look like a deeper cycle pullback towards the end,” he added.
Fellow analyst McKenna warned Bitcoin investors not to expect a sharp recovery in the short term, adding that the market could “travel sideways for a month or two.”
“This is not a v-bottom scenario. I believe the value will be cheap for a while and we will enter an accumulation market phase.”
Michael van de Poppe, founder of MN Capital, took a more neutral stance, saying that a continued correction in the BTC price could define the bottom of the cycle or signal the start of a “big crisis.”
“It’s binary. Either we go back up in a V or we rotate into $BTC as a safe haven along with gold and ETH and DeFi takes over as a safe haven for the banking system.”
If a V-shaped recovery scenario unfolds, BTC could surge over the next few days, up 32% and retest the $70,000 level. The Relative Strength Index (RSI) is in oversold territory at 28, suggesting that the bearish momentum is about to lose steam and a recovery could follow if bulls start buying the dips.
Related: Bitcoin Analyst: Sellers ‘Fatigued’ After 10% BTC Price Rebound
Analysts Target $40K Bitcoin
The ongoing market correction has market participants wondering how low the Bitcoin price can go before the trend reverses.
CryptoQuant founder Ki Young Ju set a lower target within the demand zone of $45,000 to $55,000, which is the cost base of “mining companies” and “Binance traders” respectively. The cost base of traders is known to support prices during bull markets.
The bourse warned that if prices fall below this demand zone, a bear market will be confirmed, similar to what happened in November 2018, March 2020 and May 2022.
Popular analyst Scott Melker predicted that the Bitcoin price could fall below $45,000 before September.
“Polymarket traders are betting that Bitcoin will continue to fall, predicting a 45% chance of it dropping below $45,000 before September. This sentiment spiked to 65% early in the European trading session, with a lot of liquidations underway,” Melker wrote in an Aug. 5 post.
Bitcoin analyst Tour Demeester then reported that BTC is trading just above $51,000 and said that the demand zone between $45,000 and $40,000 could be a technical downside target for BTC.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.