The dominant asset in the cryptocurrency market, Bitcoin (BTC), has experienced an unexpected and sharp decline, hitting levels not seen in months. At the moment, BTC exchanged hands at $50,899, marking a 16.40% dip over the last 24 hours.
Earlier today, it plunged to $49,111, marking its first fall below the $50K threshold since February. This steep decline starkly contrasts with the cryptocurrency’s impressive performance just a week ago when it soared to a $69,987 high on July 20. Since that peak, Bitcoin has lost over 28% of its value.
Crypto Market Cap Drops 18%, Traders Face Liquidations
Following these massive sell-offs, the global crypto market exhibited a significant decline, with the overall market capitalization dipping by over 18.06% to $1.77 trillion in the last 24 hours. As a result, many altcoins experienced double-digit losses.
Moreover, as observed on CoinGlass, over 309,000 traders were liquidated, with the total liquidations reaching $1.24 billion within the same timeframe. The most significant single liquidation order was executed on Huobi, with a BTC-USD value of $27.00 million.
Meanwhile, BTC and the overall market trading volume paint a different picture, as they experienced surges of 218.41% and 233.44%, respectively. This suggests that there is still active trading and investor interest in the market, even amidst the recent sell-offs and volatility.
Bitcoin Breaks Descending Wedge Pattern
Since peaking in mid-March, Bitcoin has been hovering within a descending broadening wedge pattern, marked by a sequence of lower highs and lower lows. This pattern typically signals a consolidation phase before an anticipated upward breakout.
However, earlier today, the price slipped below the wedge’s lower trendline, which could lead to further falls in the week ahead unless the bulls regain momentum and push the price back above the trendline.
Adding to the bearish outlook, the 50-day moving average is on the verge of crossing below the 200-day moving average, forming a death cross. This technical signal often precedes further price drops, amplifying the market’s uncertainty and tension.
Will Bulls Defend the $52K Wedge Support?
On the brighter side, it is crucial to monitor whether the bulls can defend the descending broadening wedge pattern’s lower trendline, which is currently positioned around the $52K level. Should the bearish intraday candlestick close above this threshold, a possible bear trap scenario could unfold, resulting in a potential reversal pattern in the short term.
This move could push Bitcoin to an intraday high of around $60K, with the potential to reach its immediate high at $65.6K, last seen on 1 August. This shift could mark a 20% uptick from its current price level.
Nevertheless, Bitcoin could witness its prices plummet to $48K for potential support should a breakdown below the wedge’s lower trendline occur, boosted by solid trading volumes. If this support falters, the ongoing selling spree could further pull BTC’s price to deeper levels, potentially revisiting the $40,000 zone, where buyers may target entry points near the notable January swing low.