Bitcoin Short-Term Fate Hangs in the Balance as It Tests $58,840 Support

Today’s downturn in the crypto market led to a pullback in Bitcoin’s price, retreating to the $58,000 level, testing a key support zone.

Amid Bitcoin’s crash, analyst Rekt Capital observed that BTC is attempting to establish a new support level, with the price currently hovering around the CME Gap area. This phenomenon occurs when the CME futures market opens at a price that is significantly different from the previous day’s close, creating a gap in the price chart.

Bitcoin’s current consolidation within the CME Gap area suggests a potential retest of support at this level. If the cryptocurrency can hold its ground, it could stabilize the market and potentially set the stage for a move toward the resistance level at $71,535, which has been tested multiple times but remains unbroken.

The outcome of this retest will be crucial in determining Bitcoin’s short-term trajectory. Notably, the current support level at $58,840 was previously a resistance point when Bitcoin fell below $54,000, and it must now hold for the market to maintain bullish momentum.

Change Could Come After Rate Cuts

In addition to the CME Gap activity, Bitcoin has also faced repeated rejections from its Bull Market Support Band, a technical indicator comprised of the 20-week Simple Moving Average (SMA) and the 21-week Exponential Moving Average (EMA).

According to Benjamin Cowen, founder of Into The Cryptoverse, Bitcoin’s struggles to break above this indicator may indicate a continuation of the current sideways or downward trend.

The repeated rejection of the Bull Market Support Band suggests a weakening of upward momentum, potentially reflecting a lack of strong buying interest in the market.

As noted by Cowen, Bitcoin may remain in a period of subdued performance until broader economic conditions improve, particularly if central banks introduce interest rate cuts, which typically have a positive impact on risk assets like cryptocurrencies.

Liquidations and Volatility

In related news, the market’s recent dip has triggered a wave of liquidations. Bitcoin experienced a notable 5% drop, leading to the liquidation of long positions worth $192.90 million on Bybit within four hours.

This downturn also caused 10,000 BTC in open interest to be liquidated. The volatility has prompted warnings from platforms like CoinGlass, urging traders to reduce leverage amidst ongoing fluctuations.

Despite the sell-offs, liquidations have started to slow down, with Bybit reporting $1.42 million in liquidations over the past four hours. However, Binance experienced a higher volume of liquidations, with $4.06 million positions closed in the same period.