After the devastating fall below $65,000, Bitcoin’s slide toward $57,000 was the last thing anyone expected. Still, it is already reality and the market will have to act one way or another. Should Bitcoin fall below the pivotal $57,000 barrier, three possible results follow.
With BTC drop below $57,000, the 200-day exponential moving average (EMA) loses relevance as a support level. As a main technical indicator to assess the overall trend, the 200 EMA has been rather important.
If Bitcoin lose this support, it would enter bearish territory and would further aggravate the sell-off. Further decline in Bitcoin’s price could follow traders and investors losing faith in its ability to maintain above critical support levels.
Bitcoin Faces More Liquidations
Many purchasers would try to grab the knife and buy BTC at what they believe to be a cheap price around $56,000. Should BTC fail to sustain this degree, there could be more liquidations.
The triggered stop-loss orders of purchasers could lead to another sell order executed, therefore further reducing the price. Should there be greater selling pressure, which would hasten the fall, it could be more difficult for the price of Bitcoin to normalize.
Should Bitcoin go below $57,000, some institutional selling activities could be terminated owing to a lack of liquidity. This situation can lead to a sideways market whereby BTC trades between $55,000 and $60,000 as buyers and sellers wait for more favorable conditions. Conversely, should institutions continue selling, BTC might drop as low as $50,000.
The activities of institutional investors, who account for a substantial portion of the market, considerably affect the price of BTC. Should the sell-off persist, Bitcoin’s recovery in the near term could prove challenging since this might lead to a protracted bear market.
The collapse in BTC has added still another level of complication to an already erratic economy. If BTC crosses this crucial level, the invalidation of the 200 EMA, the behavior of opportunistic purchasers, and the influence of institutional investors will together decide its fate.
