Bitcoin (BTC) price has declined by more than 3% over the last seven days, with the bulk of gains accrued from the Aug. 5 low at $49,500 being erased.
Bitcoin’s price is down 20% over the last 90 days, and its daily trading volume has dropped by 32% over the same period. However, several indicators hint at a deeper correction, making a swift recovery from the current price level unlikely.
Analysts say Bitcoin could drop to $50,000
Bitcoin’s downtrend has led analysts at 10x Research to predict prices in the low $50,000 range.
Markus Thielen, an analyst at 10x Research, shared the following chart showing that the latest correction saw Bitcoin price drop below the ascending trendline of an asymmetrical triangle. A breakdown of this support line projected a retest of the Aug. 5 lows below $50,000.
“A Bitcoin drop below $50,000 is inevitable.”
Michael Van de Poppe, the founder of MN Capital, has a similar target for Bitcoin. Van de Poppe noted that Bitcoin broke below the Aug. 15 low at $56,000 to collect the demand-side liquidity lying under it.
However, this did not produce the required upward bounce, putting Bitcoin at risk of further declines to “$53k or even $49K,” before bouncing back.
Meanwhile, Glassnode analysts anticipate Bitcoin to slide toward $51,000 as this level is the true market mean and historic support.
“In the event of a local downturn, the pricing level of $51k remains a critical area of interest that must be maintained for further price appreciation.”
Bitcoin price loses key support level at $58,000
Bitcoin’s drop from a high of $65,000 on Aug. 25 to a three-week low of $55,555 on Sept. 4 saw BTC break below the 200-day exponential moving average (EMA) again.
Commenting on the latest price action, popular trader Skew noted that Bitcoin’s price had resulted in increased ask bids around the $58,000 mark. This suggests that this level acted as a stiff resistance for Bitcoin bulls in the short term.
At the time of publication, the 200-day EMA was at $59,533, above the spot price.
The 200-day EMA is usually an important line of defense for Bitcoin during bull cycles, and losing it has exposed BTC to further risks. Data from onchain data aggregator IntoTheBlock reveals that the path with the least resistance for Bitcoin is on the downside.
The In/Out of the Money Around Price (IOMAP) chart below shows that Bitcoin faces relatively stiff resistance on the upside.
The immediate resistance zone is between $57,928 and $59,668 where approximately 929,3670 BTC were previously bought by roughly 1.98 million addresses. This suggests that Bitcoin’s upside could be capped here, with a high possibility for deeper corrections.
Related: Bitcoin investors ‘relatively profitable’ even as the bull market takes a pause
Bitcoin bear flag places downside target at $45,000
From a technical perspective, the Bitcoin price action has led to the formation of a bear flag pattern, a corrective setup that forms after the price consolidates inside an up-sloping range following a sharp price decline.
Bear flags typically resolve after the price breaks below the lower trendline and drops by as much as the previous downtrend’s height. This puts the lower target for Bitcoin price at $45,450 — levels last seen on Feb. 9.
Additionally, Bitcoin’s daily relative strength index is negative at 44. This suggests that the market conditions still favored the downside, boosting BTC’s chances of reaching its bear flag target.
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