Aug 4, 2024
6thTrade
Bitcoin Price Continues to Decline Amidst Economic Turmoil
Over the past week, Bitcoin has experienced a steady decline in its market value, driven by various economic and market developments. According to CoinMarketCap, Bitcoin currently trades around the $60,000 mark, having lost over 11.17% in value within the last seven days. While many crypto enthusiasts hope for a stabilization, CryptoQuant analyst abramchat predicts a less optimistic outlook, suggesting that Bitcoin may face further losses in the near future.
Bitcoin Price Far From Recovery?
In a Quicktake post on CryptoQuant, abramchat highlighted that Bitcoin has recently lost a critical short-term support level at $64,580. This figure represents the average purchase price of Bitcoin over the past six months. The breach of this support implies that many investors are now holding Bitcoin at a loss, potentially leading to increased selling pressure as they seek to minimize their losses.
Abramchat attributes Bitcoin’s recent decline to several economic and political factors that have also negatively impacted other financial markets, notably the stock market, which saw significant losses on Thursday and Friday. Additionally, the collapse of the crypto lender Genesis, which began repaying creditors after declaring bankruptcy in January 2023, has also played a role. On Friday, Genesis transferred $1.5 billion in Ethereum and Bitcoin as part of their effort to manage $4 billion in debt.
Three Rate Cuts Possible in 2024 Amid Recession Risks
Bitcoin’s price has slid 10% alongside the US stock market since August 1, when the US reported unemployment claims hitting an almost one-year high and declining manufacturing activity. Bitcoin exchange-traded funds (ETF) have witnessed approximately $200 million in withdrawals during the same period. Interestingly, BTC's decline comes despite increasing odds of three rate cuts in 2024 instead of one, marking a significant departure from the trend observed over the past year, where crypto markets often welcomed weak economic data. This decline is likely driven by rising recession alerts following the latest US jobs report.
Historically, Bitcoin has struggled during periods of heightened recession fears. For example, during the COVID-19 market crash in March 2020, Bitcoin fell in tandem with the US stock market. Bitcoin’s price began to rebound when the Federal Reserve implemented quantitative easing and rate cuts. Numerous crypto analysts, including Michael van de Poppe, see a similar price trend in the coming weeks. In other words, Bitcoin will face recessionary risks but may rebound after the Fed implements its rate cuts in September.
Technical Analysis
According to the latest chart data, Bitcoin is currently trading around $59,423.98, which represents a decline of approximately 2.42% from its previous value. The chart shows key support levels at $58,772.67 and $56,445.09. If Bitcoin continues its downward trajectory and fails to hold the $58,772.67 support level, it could test the next support at $56,445.09.
The breach of the critical short-term support at $64,580 has significantly impacted market sentiment, suggesting further downside potential. If the price does not recover soon, investors may see a continuation of the bearish trend, targeting the $53,000 to $54,000 support zone.
Future Price Trajectory
Looking ahead, abramchat suggests that if Bitcoin fails to reclaim the $64,580 support level, it could decline further to the next significant support zone around $53,000 to $54,000. These price levels were last observed in early July following a massive market sell-off by the German government. Furthermore, abramchat advises caution in purchasing altcoins during this period. The analyst warns that the current market negativity could have a significant adverse impact on other cryptocurrencies besides Bitcoin.
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