Bitcoin (BTC) price continues to face downward pressure as the total cryptocurrency market cap falls below $2 trillion. The Crypto Fear and Greed Index also shows “extreme fear” in the market for the first time since the first week of August.
Let’s take a look at the BTC price levels below $55,000, which appear to provide support and a potential bounce area.
Bitcoin hits new all-time high of $57.4K on 1-hour chart
Bitcoin hit a monthly low of $55,250 on September 6, but on the positive side, it tested the demand zone that has been untouched since August. If it forms a lower low on the 1-hour chart, BTC could experience an immediate swing high towards $57,500.
BTC/USDT on 1-hour chart. Source: TradingView
Additionally, there is a bullish divergence between price and the Relative Strength Index (RSI), which was also observed on the 4-hour chart on September 4.
On the 1-hour chart, each swing low on the hourly chart in September showed an average recovery of about 4%.
A 4% recovery would currently equate to around $57,500-$58,000.
There is also a leveraged liquidation position at $57.5K. After removing the downward liquidity in the past few hours, the price may move back into the lower high range, and day traders may treat the liquidity pool as a potential short opportunity.
Bitcoin 24-hour liquidation heatmap. Source: CoinGlass
The short-term holder realized price is $52,000.
A close below $55,000 could see further declines in the BTC price over the next few days. A loss of demand at $55,000 could see Bitcoin retesting near $52,100.
Bitcoin researcher Axel Adler Jr. emphasizes that this is the “next closest target” because it is the current realized price for short-term holders.
Additionally, a price range of $50,500 to $53,000 was formed as whales gathered in large numbers starting in February 2024.
BTC/USDT on 4-hour chart. Source: TradingView
Will liquidity be wiped out at $49,000?
If BTC fails to hold $52,000, $49,000 will be the final support, and the long-term bullish structure will face severe bearish pressure.
Similar to the last bull run of 2021, BTC will likely retest the 50-week EMA if it falls to $49,000 in the coming weeks. Bitcoin hasn’t closed a weekly candle below the 50-week EMA since October 2023.
BTC/USDT on the weekly chart. Source: TradingView
In 2021, Bitcoin held its weekly position above the 50-week EMA, which provided support before the second leg of the rally. The RSI also reset around the 50 level, and a similar reset is happening now.
relevant: Arthur Hayes predicts BTC price to drop below $50,000 as Bitcoin is at risk of a ‘dramatic’ trend change.
If the price action repeats, Bitcoin will avoid a prolonged consolidation below $50,000 and will likely close the week below the key EMA level.
Ultimately, there is a possibility that the $49,000 floor will be swept away again in the second half of 2024 before the bull market can continue.
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.