Tanks to $56,480—Will $53K Support Prevent a $50K Test?

As Bitcoin falls under $57K with the US market sell-off, will $53K support stand strong to avoid a correction to $50K?

With a boost in the bear cycle, the price of Bitcoin fell under the $57,000 mark, with a massive crash of 2.77% on Wednesday. The downfall aligns with multiple bearish catalysts in the global and ETF markets. 

As the deteriorating sentiments warn of an extended correction, Bitcoin hangs by a thread above $56,000. Will the correction phase lead to a test of bullish dominance at the $50,000 mark?

Negative Turn For Bitcoin Price

In the daily chart, the Bitcoin price action reveals another bullish failure to surpass the 200-day EMA following the 3.18% jump on Monday. Undermining the bullish recovery, the Bitcoin price dropped by 2.77% on Tuesday and continues the declining trend with a 1.76% intraday drop. It is currently trading at $56,480.

The bearish trend intensifies as Bitcoin’s price breaches the critical support level of $57,557. The next notable support level is near $53,550, increasing the likelihood of a death cross forming between the 50-day and 200-day EMAs.

Notably, the daily Relative Strength Index (RSI) remains above the 40% threshold, exhibiting a minor bullish divergence. This subtle indication of potential buying interest may suggest that the downward momentum is not entirely one-sided.

Amid $1.05T US Stock Market Loss, Bitcoin Holds Ground

Bitcoin’s latest bear cycle comes from the U.S. stock market, which registered a massive correction. The S&P 500 plummeted 2.1%, while the NASDAQ suffered a steeper 3.2% decline, with over $1.05 trillion in market value evaporating. The Department of Justice’s subpoena against NVIDIA exacerbated the downturn, causing the company’s stock to plummet 10%.

However, compared to previous corrections in U.S. markets, BTC fell by only 2.16% compared to the last correlated correction of 7.16%. Hence, the idea of Bitcoin being a hedge to the stock market might soon materialize.

Meanwhile, the Japanese stock market has also been severely impacted as the effect of the yen carry trade continued to unfold.

Even the Bitcoin ETF market failed to showcase any signs of recovery. Instead, it revealed a 288% million net outflow, the biggest outflow in the past four months. 

All these bearish events unfolded in a single day; the crypto market witnessed $170 million in long position liquidations with the start of panic selling.

Will Bitcoin Hold Above $50,000?

As the bearish sentiments overflow, the panic selling can result in an extended correction in Bitcoin and the crypto market. However, with immediate support near the $53,550 mark, the BTC price can avoid a correction to the $50,000 mark. 

Further, the RSI divergence and the lower price rejection reveal solid underlying demand near the $56,000 level. Hence, the bearish run in Bitcoin to challenge the $50,000 mark seems the worst-case scenario in current situations.