Original title: "Bitcoin lost $59,000 in the short term, beware of the possibility of further decline"

Original author: Mary Liu, BitpushNews

The cryptocurrency market fell sharply on Tuesday.

Bitpush data showed that Bitcoin repeatedly tested the $62,000 support level that day, and started a downward trend after lunch, breaking through the $61,000, $60,000 and $59,000 levels in succession, falling nearly $4,000 during the day, falling to nearly $58,000 at the lowest, and rebounded to above $59,000 as of press time. Ethereum once fell below $2,400 during the day, with a 24-hour drop of more than 10%.

Altcoins fell across the board, with 80% of the top 200 tokens by market cap losing money. Sun (SUN) continued its gains, up 9.6%, followed by Helium (HNT) up 8.5%, and Floki (FLOKI) up 7.1%. Echelon Prime (PRIME) led the decline, down 12.3%, Aragon (ANT) down 7.8%, and Ethena (ENA) down 6.5%.

The overall market value of cryptocurrencies is currently $2.07 trillion, with Bitcoin accounting for 56.2% of the market.

As for U.S. stocks, at the close, the S&P 500 and Nasdaq both rose 0.16%, while the Dow Jones was flat.

Market Sentiment Is Highly Sensitive

Shubh Varma, Co-founder and CEO of Hyblock Capital, said: “The current cryptocurrency market reflects a state of heightened sensitivity, with the Fear and Greed Index oscillating between extremes, highlighting its reactivity. The recent swing from fear to greed underscores how markets continue to react strongly to news and events.”

Varma noted: “Despite this volatility, the overall economic environment remains favorable. Central banks, including the Federal Reserve, have taken a dovish stance, with rate cuts expected soon, and the global liquidity cycle is increasing, suggesting a favorable backdrop for risk assets, including cryptocurrencies. The dovish sentiment at the Jackson Hole Symposium further reinforced this outlook, as evidenced by the large inflows into Bitcoin ETFs, which reported $252 million in net inflows on Friday alone.”

Watch for downside support

After highlighting the increase in Bitcoin volatility, Varma noted: “Market participants are closely watching this behavior, especially as retail long positions continue to increase. Historically, increases in retail long positions have been negatively correlated with Bitcoin’s price, typically signaling a bearish outlook. Altcoins have also shown significant activity, especially in response to specific news events.”

For example, the arrest of Telegram CEO Pavel Durov led to a sharp drop in TON’s price and was accompanied by large-scale liquidation events. Despite this, TON’s open interest still hit a record high, indicating that traders are still actively involved and may be trying to profit from volatility. Varma said: "This behavior shows that even in an uncertain environment, the market is not sitting on the sidelines, but is starting to actively look for opportunities."

He pointed out that "liquidity levels play a vital role in the current market dynamics, especially during the ongoing consolidation phase," and identified the key liquidity area for Bitcoin "below 62,000 and around the mid-58,000 area."

Varma believes: "Prices may fall to these levels, and a sharp drop in holdings should be closely watched. This may indicate the biggest pain point of the market. So far, most of the position chasing has occurred during price declines, which usually leads to subsequent price rebounds. Traders are keen to take advantage of this pattern. Order dynamics also provide valuable insights into market sentiment. At present, there is an imbalance on the supply side, which has historically been a bearish signal."

Analysts said that if Bitcoin loses the $62,000 support level and "moves towards a determined liquidation area, ideally accompanied by a sharp drop in open interest, then this could be an attractive opportunity. In addition, if the order imbalance shifts to the demand side, this situation will create a high-risk, high-reward setup for long positions, especially given the favorable macroeconomic environment."

Technical chart analyst Greg Michalowski wrote that BTC The price moved further away from the 100-day and 200-day moving averages, which are close to converging, and the upside breakout failed. In addition to the natural support level of $60,000, a break below this level will allow traders to target the 38.2% retracement from the September 2023 low to the March 2024 high, which is located at $55,124, which is a key position for investors to be wary of long-term downside momentum.

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