The recent drop of Bitcoin to $57,000 was surprising after its sharp decline below $65,000.
In this new reality, the market must react in some way. Here are three potential scenarios if BTC breaks below the critical level of $57,000.
Weakening of the 200 EMA as support
If Bitcoin falls below $57,000, the 200-day exponential moving average (EMA) will no longer serve as a level of support. This is a key technical indicator for assessing the overall trend. Loss of this support could push BTC into bear territory and potentially strengthen the sell-off. As traders and investors lose confidence in Bitcoin’s ability to maintain key support levels, this could lead to further price declines.
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Rise in liquidations
Many buyers may try to use the decline to purchase BTC at low prices around the $56,000 mark. However, if the cryptocurrency cannot hold this level, more liquidations may occur. This could trigger additional sell orders due to the activation of buyers’ stop-losses, further lowering the price. Increased selling pressure could make it difficult to stabilize the price of Bitcoin, accelerating the decline.
Potential sales and market impasse
If Bitcoin falls below $57,000, some institutional sales may stop due to lack of liquidity. This could lead to a sideways market, with the leading cryptocurrency trading between $55,000 and $60,000, while buyers and sellers wait for more favorable conditions. On the other hand, if institutional investors continue to sell, BTC could drop to $50,000. Institutional investors, holding a significant portion of the market, have a significant impact on the price of Bitcoin. Continued sales could impede the recovery of BTC in the short term, potentially leading to a prolonged bear market.
