Early August 2024 has seen a major sell-off in financial markets, causing stocks and cryptocurrencies to lose billions of dollars in value within just a few hours.
Bitcoin (BTC), the world’s leading cryptocurrency, is one of the most volatile and dramatic assets. After once promising to reclaim its annual and all-time highs (ATH) above $73,000, Bitcoin has quickly dropped through several support levels.
In fact, by early Monday morning, August 5, BTC briefly fell below $50,000. However, this level appeared too attractive for investors to ignore, and buying pressure at the dip was strong enough to help the cryptocurrency rebound to $52,994 at the time of this report.
Why is Bitcoin Declining?
As with recent Bitcoin crashes, there are various theories about what caused this drop. However, unlike previous declines, BTC fell below $56,000 this time without a major event like the German government selling seized cryptocurrency to blame.
In reality, it’s likely a combination of factors caused this sell-off, including recent job reports, spillover effects from the stock market (which has also seen sharp declines), and growing fears of a prolonged and worsening economic recession.
Some notable figures in the industry suggest there may be other reasons behind the cryptocurrency market’s collapse. For example, Arthur Hayes recently claimed on X that sources in the traditional finance world told him that a large organization is in trouble and is related to this sell-off.
How Bad Will the Crypto “Bloodbath” Get?
Regardless of the reasons—or combination of reasons—behind the crypto market “bloodbath,” the fact remains that nearly $400 billion has been wiped off the digital market cap, and Bitcoin seems to be struggling to maintain the psychologically important $1 trillion market cap.
Even though BTC has avoided falling below $50,000, it’s important to remember that recent days have seen many instances where the cryptocurrency price dropped below key support levels, only to recover slightly before plunging further into lower support zones.
What is the Next Support Level for Bitcoin?
The next support level Bitcoin may find if it falls below $50,000 is around $47,000, as nearly 1 million addresses have bought almost half a million BTC at that price point.
[Disclaimer]: The content on this page should not be considered investment advice. Investing is always speculative. Your capital is at risk when investing.
