Bitcoin (BTC) suffering a dramatic 10% drop. This plunge is part of a larger market sell-off spurred by growing recession fears in the U.S. and a series of negative economic indicators. As Bitcoin struggles to hold above $54,000 and Ethereum dips below $2,350, many are left wondering if Bitcoin will test the $50,000 threshold in the near future.

The Ripple Effect of U.S. Market Declines

The turmoil began with a substantial crash in U.S. markets on Friday, which has set off a chain reaction across global financial systems. As U.S. markets experienced a steep decline, investor confidence faltered, leading to a broader sell-off in both traditional and cryptocurrency markets. This shift in sentiment has been mirrored in Asian and European markets, where major indices have also turned bearish.

Today’s data shows Bitcoin trading below $54,000, while Ethereum has fallen beneath $2,350. This downturn has been particularly harsh on altcoins, which have seen even more severe declines. The current wave of selling pressure is intensifying, prompting concerns about whether the bearish trend will persist throughout the week.

Bitcoin’s Technical Breakdown

On the daily chart, Bitcoin’s recent performance has been characterized by a swift and severe drop from its peak of $70,000. The cryptocurrency has formed several bearish candles in a row, resulting in a significant 18% decrease over the past few days.

At present, Bitcoin is hovering around $52,569, reflecting an intraday drop of approximately 7.73%. The formation of a massive bearish engulfing candle indicates strong selling pressure. Additionally, Bitcoin’s price has fallen below all major exponential moving averages (EMAs) — including the 50, 100, and 200-day EMAs. This situation has been compounded by a bearish crossover between the 50-day and 100-day EMAs, signaling ongoing downward momentum.

The Relative Strength Index (RSI), which measures the speed and change of price movements, has also dropped into the oversold zone. This suggests that the market may be experiencing extreme selling pressure, which could lead to further declines if the trend continues.

Surge in Market Liquidations

The current market sell-off has led to a significant increase in liquidations. According to Coinglass, nearly $700 million worth of positions have been liquidated in the past 12 hours. Of this amount, $569 million in bullish positions have been liquidated. This massive scale of liquidations adds additional downward pressure on Bitcoin and other cryptocurrencies, exacerbating the overall market decline.

The U.S. Market Crash: A Key Driver

The U.S. stock market has been a major driver of the recent global market slump. The Nasdaq index, which is heavily weighted towards technology stocks, has fallen almost 10% in the last three weeks, including a 3.4% drop just last week. This marks the worst three-week performance for the index since September 2022.

Several factors have contributed to this decline. A disappointing jobs report, rising unemployment rates, and a slowdown in the manufacturing sector have all fueled market fears. Moreover, the U.S. Federal Reserve’s recent decision to maintain current interest rates — without any promise of a rate cut in September — has further dampened investor sentiment. Lower interest rates typically support asset prices, including cryptocurrencies. The Fed’s stance on keeping rates unchanged has therefore intensified the negative sentiment in the crypto market.

Global Impact: Asian and Indian Markets in Decline

The negative impact of the U.S. market crash has spread globally. In Japan, the Nikkei 225 index has fallen by 11% over the past three weeks and is now down nearly 30% from its all-time high. This decline has been exacerbated by the Bank of Japan’s recent decision to raise interest rates to their highest level in 16 years. This move has put additional pressure on Japanese investors, including those in the cryptocurrency market.

Similarly, Indian markets are also under pressure. The NIFTY 50 index, which tracks the top 50 stocks in India, has dropped by 3% today and is down about 4.5% from its all-time high. The global market decline, combined with rising interest rates, has created a challenging environment for investors worldwide.

Will Bitcoin Fall Below $50K?

As selling pressure continues to mount, Bitcoin’s support trendline is increasingly under threat. With Bitcoin trading below $53,000 and the global market experiencing a significant sell-off, there is growing concern that Bitcoin could fall below the $50,000 mark.

However, there remains a possibility for a rebound. If global markets stabilize and find a base, Bitcoin and the broader crypto market could potentially lead a recovery rally. The history of market cycles shows that while downturns can be severe, recoveries often follow periods of intense selling pressure.

Conclusion

The recent 10% drop in Bitcoin is a clear reflection of broader market anxieties and the impact of a global financial sell-off. Driven by a combination of U.S. market declines, rising interest rates, and increased liquidations, Bitcoin and other cryptocurrencies are facing significant challenges. While the short-term outlook is bearish, the potential for a recovery remains if market conditions stabilize.