The Bitcoin Bottom May Not Be Reached — Traders Eye Low $40K Price Targets

It seems crypto traders share a consensus that the current market turmoil is far from resolved.

Market Overview

Bitcoin (BTC) experienced a significant decline, dipping below $50,000 during early trading hours on August 5. This plunge has been fueled by a risk-off sentiment that has significantly affected global markets. Over the past three days, Bitcoin’s price has dropped nearly 31%, a situation analysts describe as a potentially unprecedented occurrence.

This recent price drop has resulted in more than $500 billion being erased from the overall crypto market in just one day, compounded by the liquidation of numerous leveraged positions.

According to Coinglass data, around $1.08 billion in leverage positions were liquidated across derivatives, with long liquidations making up 74% of that total (approximately $803.76 million).

During the same timeframe, over $404 million in Bitcoin positions were liquidated, of which $282.81 million were long liquidations.

Mixed Sentiments Surrounding Bitcoin Price Recovery

The ongoing decline in Bitcoin’s price is influenced by multiple factors, including recent weak US economic indicators and job data, which have sparked recession concerns, as well as escalating tensions in the Middle East.

Analysts from QCP questioned whether the market has encountered a “perfect storm” scenario in relation to current conditions.

Independent trader Bob Loukas referred to the market’s current state as a “once in a 7-10 year event,” making it challenging to predict the market’s direction following such a significant drawdown.

Loukas anticipates that this correction could persist until mid-September, potentially followed by a rally that might look like a deeper cycle pullback by the end of it.

Another analyst, McKenna, cautioned Bitcoin investors against expecting a quick recovery, suggesting the market may experience a sideways movement for the next 1-2 months.

“This isn’t a v-bottom scenario. I believe the value will remain cheap for some time, entering an accumulation market phase.”

Michael van de Poppe, founder of MN Capital, held a more neutral view, stating that the ongoing correction might delineate the cycle’s bottom or signal the initiation of a larger crisis.

“It’s binary. Either V-Shape back up, or it will rotate toward $BTC as a safe haven alongside Gold and $ETH, taking over with DeFi as the safe haven for banking systems.”

If a V-shaped recovery transpires, BTC could experience a rapid increase in the coming days, potentially rising 32% to test the $70,000 mark. The relative strength index (RSI) currently sits in the oversold territory at 28, indicating that downward momentum may soon diminish, paving the way for a recovery if bullish traders capitalize on buying opportunities.

Price Targets: Analysts Set Sights on $40,000 for Bitcoin

The ongoing market correction has left market participants speculating about how low Bitcoin’s price may fall before a reversal occurs.

Ki Young Ju, the founder of CryptoQuant, identified a lower target within the $45,000 to $55,000 demand zone, highlighting these levels as significant based on the cost basis for “mining companies” and “Binance traders.” Such cost bases have historically supported prices during bullish trends.

Young Ju cautioned that if Bitcoin’s price drops below this demand zone, it would signify a bear market, akin to patterns observed in November 2018, March 2020, and May 2022.

Scott Melker, a noted analyst, suggested that Bitcoin’s price may drop below $45,000 before the end of August.

“Traders on Polymarket are speculating on Bitcoin’s continued decline, assigning a 45% chance that it will fall below $45,000 before September. This sentiment increased to 65% during early European trading due to significant liquidations,” Melker indicated.

Additionally, analyst Tuur Demeester observed Bitcoin trading slightly above $51,000, noting that the $45,000 to $40,000 demand zone could serve as a technical downside target for BTC.

This content does not provide investment advice or recommendations. All investment and trading actions carry risks, and individuals should perform their own research before making decisions.