Bitcoin Price Dropped Below $56,000 - How Low Could BTC Fall?


Bitcoin price dropped to $56k earlier today. How low can BTC price fall?

The trading session on Tuesday became a "black" day for the cryptocurrency market. In just a few minutes, almost $1 billion worth of client positions were liquidated. The buyers were forced to capitulate by a sharp collapse in the BTC rate, as a result of which the value of the flagship cryptocurrency adjusted from $64,000 to $58,500. By the end of the day, however, the price of Bitcoin was able to recover to $60,000.

Today Friday, November 19, the price of Bitcoin is falling again. At 08:49 AM, the largest cryptocurrency by market capitalization traded at $55,906.82 and is down 3.47% in the last 24 hours, according to CoinMarketCap.

Bitcoin Dropped Below $56,000 - How Low Could BTC Fall?

The fall in its capitalization by 16% from the peak a week earlier dropped the fear and greed index to 34 (-20 points per day and -40 per week).

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How much can Bitcoin price fall?

Bitcoin broke through the first line of defense, moving strongly below the 50-day moving average at $59,400, and continuing its decline. In addition, a dip below the 61.8% retracement level of the bullish momentum since late September prepares for a deeper retracement. Chances have grown significantly that the bears are aiming to push the price all the way to $48,000, although there are still a number of significant stops along the way.

It should be noted that in addition to technical factors, there were fundamental reasons for the corrective dynamics.

On Monday, US President Joe Biden signed into law a $1 trillion infrastructure bill that would further regulate the digital asset industry. The document contains an expanded interpretation of the concept of a "broker" - now it will include miners, software developers, liquidity providers in DeFi-protocols and other market participants who can now be obliged to report to the US tax service in the event of a transaction with digital currency in the amount of more than $10,000.

Interestingly, at the stage of discussing this project, a number of congressmen advocated clarifying the wording related to the cryptocurrency market, but this did not affect the final result.

In addition, a general deterioration in market sentiment also led to a decrease in the capitalization of the crypto market against the backdrop of shocking inflation data in the United States, according to which in October the consumer price index reached its highest level in the last 30 years, exceeding 6%.

It is not surprising that in such conditions, market participants decided to reorient their capitals in favor of defensive assets such as gold and the dollar. Traders believe that in order to prevent further inflation in the US, the Fed may raise its key interest rate.

Recall that the prospect of tightening American monetary policy remains one of the main threats to all risky assets, including cryptocurrency.

Considering the above, in the current environment, we recommend refraining from building up "long" positions in favor of the short on BTC/USD with a target of $52,000.

Ether price outlook

At the time of writing, the ETH/USD pair continues to find demand in the dips towards $4,000. In the young cryptocurrency market, round levels are often pivot points for a reversal or move. And now in the ETH/USD pair, the Fibonacci retracement level and the 50-day moving average are also concentrated in the same area. Unlike Bitcoin, Ether continues to receive support for them.

Interestingly, Ether, whose price began to rise amid the popularity of the decentralized financing network Ethereum, has gained more than 60% since the beginning of October and traded above $4,850 last week. Over the past 12 months, the price of Ether has increased by more than 800%.

Has Ether assumed the role of guiding star in the crypto market?

Think we missed something? Let us know in the comment section below.

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