Bitcoin to Fall to $46k? Crypto Market Sentiment Hits “Extreme Fear”

TLDR:

• Crypto market sentiment dropped to “extreme fear” with Bitcoin falling below $56,000
• Arthur Hayes predicts Bitcoin could drop below $50,000 over the weekend
• Bitcoin is down 2.7% in 24 hours, wiping $29.7 billion from its market cap
• Other major cryptocurrencies also saw price declines
• $94.26 million in liquidations occurred, mostly from long positions

The cryptocurrency market has entered a period of uncertainty and fear as Bitcoin’s price dropped below $56,000, dragging down other major cryptocurrencies with it.

The Crypto Fear & Greed Index, a popular measure of market sentiment, plummeted to 22 on September 6, indicating “extreme fear” among investors.

This marks the lowest level since August 8 and the first time the index has entered the “extreme fear” zone since August 12.

Bitcoin, the world’s largest cryptocurrency by market capitalization, experienced a 2.7% decline in the past 24 hours, briefly touching a low of $55,838 before slightly recovering to around $56,500. This price movement erased approximately $29.7 billion from Bitcoin’s market value, according to data from CoinMarketCap.

Adding fuel to the bearish sentiment, Arthur Hayes, co-founder of cryptocurrency exchange BitMEX, shared a pessimistic outlook on social media platform X (formerly Twitter).

Hayes predicted that Bitcoin could potentially drop below $50,000 over the weekend, representing a further 12% decline from current levels. He stated, “BTC is heavy. I’m gunning for sub $50k this weekend. I took a cheeky short.”

$BTC is heavy, I’m gunning for sub $50k this weekend. I took a cheeky short. Pray for my soul, for I am a degen.

— Arthur Hayes (@CryptoHayes) September 6, 2024

The bearish trend wasn’t limited to Bitcoin alone. Other major cryptocurrencies also faced significant declines, with Ethereum (ETH) down 2.23%, Solana (SOL) falling 2.82%, and XRP decreasing by 2.19%.

This widespread market downturn led to substantial liquidations, totaling $94.26 million in the past 24 hours.

Long positions, particularly in Bitcoin and Ethereum, bore the brunt of these liquidations, accounting for $36.71 million and $17.36 million respectively.

The current market situation is further complicated by concerns about a slowing U.S. economy.

Recent jobs data released on September 5 fell short of economist expectations, raising worries about the Federal Reserve’s anticipated interest rate cuts. This macroeconomic uncertainty has added to the crypto market’s woes, as investors become more risk-averse in the face of potential economic headwinds.

The cryptocurrency market’s volatility has been evident in recent months, with the Fear & Greed Index swinging between fearful and greedy sentiments since June. This latest plunge into “extreme fear” territory underscores the market’s sensitivity to price movements and external factors.

As the market grapples with these bearish trends, many investors are closely watching key support levels. Some analysts, like veteran trader Peter Brandt, have suggested that Bitcoin might test lower support levels around $46,000 before potentially rebounding.

This is called an inverted expanding triangle or a megaphone. A test of the lower boundary would be to 46,000 or so. A massive thrust into new ATHs is required to get this bull market back on track $BTC
Selling is stronger than buying in this pattern pic.twitter.com/ekDZUJXXgd

— Peter Brandt (@PeterLBrandt) September 5, 2024

The current market downturn has also affected institutional interest in Bitcoin. U.S. spot Bitcoin ETFs have reported seven consecutive days of notable cash outflows, with a net outflow of about $211 million on Thursday alone.

This trend suggests that larger investors may be taking a cautious approach in the face of increased market volatility.

Despite the short-term bearish outlook, some on-chain data indicates that long-term holders remain committed to their positions.

The overall supply of Bitcoin on centralized exchanges has continued to decrease over the past five months, suggesting that the current market correction has not significantly shaken the confidence of those with a longer-term investment horizon.