Bitcoin may restest $48.9k support

Bitfinex analysts have expressed the view that Bitcoin could retest support near $48,900 as a potential local bottom after crypto markets plunged below $2 trillion.

Cryptocurrency bellwether Bitcoin (BTC) could be heading lower as worldwide economic uncertainty has wiped out over $570 billion worth of the digital asset since early August. If bullish momentum is not there, Bitcoin could revisit support after falling below $50,000, analysts at Bitfinex have noted.

Following the recent drop, BTC dominance has risen to 60%, meaning that Bitcoin accounts for the majority of the market and is the leading asset for virtual currencies. Therefore, any further declines in the BTC price could also lead to declines in the broader crypto ecosystem.

According to CoinGlass, BTC’s 24-hour decline has already led to liquidations worth over $1.2 billion worth of cryptocurrencies.

24-hour BTC price on August 5 | Source: crypto.news What caused the drop?

Global recession concerns have sent BTC plummeting to $49,000 in a historically tough month for cryptocurrencies. In previous years, BTC has lost an average of 7.8% and 5.5% in August and September, respectively.

However, Bitfinex analysts said that this sudden drop was not caused by on-chain factors or technical reasons, but rather macro-related.

“The collapse was mainly, if not entirely, driven by macroeconomic factors. It was triggered by the Bank of Japan’s carry trade crisis, the disappointing US employment report and the rise in unemployment,” Bitfinex analysts noted.

BTC monthly returns YoY | Source: Glassnode Bitcoin’s bounce and possible next move

While BTC started August 5 with double-digit losses, the asset has pulled back nearly 50% to the upside and was trading above $54,500 at press time. Depending on macroeconomic developments, IntoTheBlock data suggests that gaining strength between $47,800 and $57,800 is critical for Bitcoin.

Looser monetary policies could also benefit BTC and cryptocurrencies, with experts and commentators like Wharton professor Jeremy Siegel calling for an immediate rate cut from the US Federal Reserve in response to the ongoing global liquidity crisis.

BTC financial indicators | Source: IntoTheBlock