The cryptocurrency market sentiment is back in “extreme fear” as Bitcoin’s price dropped under $56,000. This recent slump has shaken the market, raising concerns about the future direction of Bitcoin and other major cryptocurrencies.
Arthur Hayes, co-founder of BitMEX, believes Bitcoin could fall further, predicting a price below $50,000 by the weekend.
Crypto Fear & Greed Index Shows Extreme Fear
On September 6, the Crypto Fear & Greed Index, which tracks market sentiment, scored 22, indicating extreme fear among investors. This marked a sharp decline from the previous day when the score stood at 29. Notably, the present score is the lowest since August 8, when the index hit 20.
This shift back into extreme fear signals growing uncertainty among investors. According to the data, Bitcoin has been in the fear region for the past month. Bitcoin’s recent drop in price has contributed to this fear, with its value falling to $55,838.
The sharp decline led to massive liquidations. CT Market Pro data shows that more than $29 billion were liquidated from the market following the dip. Fortunately, after hitting the bottom, Bitcoin began to recover gradually to $56,533.
Meanwhile, BitMEX’s ex-boss, Arthur Hayes, took to X to express his pessimism about Bitcoin. “BTC is heavy,” he said in the post, adding, “I’m gunning for sub-$50K this weekend. I took a cheeky short.”
$BTC is heavy, I’m gunning for sub $50k this weekend. I took a cheeky short. Pray for my soul, for I am a degen.
— Arthur Hayes (@CryptoHayes) September 6, 2024
Hayes is not alone in his bearish outlook, as many traders brace for further volatility.
U.S. Economic Concerns Add to Bitcoin BTC’s Struggles
Concerns about the U.S. economy are adding to Bitcoin’s struggles. Recent U.S. job data fell short of expectations, sparking fears of a sluggish economic recovery.
Many believe this could delay the Federal Reserve’s anticipated interest rate cuts, which would continue to apply downward pressure on Bitcoin.
Bitcoin’s decline also affected other assets in the crypto market. Ethereum (ETH) dropped by 2.23%, Solana (SOL) recorded a 2.82% decline, and XRP lost 2.19%.
This price dip led to significant liquidations. According to CoinGlass data, over $94 million was wiped out in the last 24 hours. The data shows that Long positions were affected the most, with Bitcoin longs accounting for nearly 40% of the total liquidations, followed by $17.36 million worth of Ethereum.
In addition, according to CryptoQuant’s recent blog post, Bitcoin’s activity is losing momentum. The blog post noted that Bitcoin’s daily active addresses have dropped to 838,000, the lowest since 2021. CryptoQuant says it could signify the broader market’s disinterest in Bitcoin.
Despite Bitcoin’s recent decline, CryptoQuant believes this could present a buying opportunity for some investors.
“For some investors, a drop in active addresses and price can be seen as an opportunity to buy Bitcoin in anticipation of a future rally,” says CryptoQuant.
Further, the post suggested that if investors see the price decline as a sign that Bitcoin is losing strength, it may lead to the formation of new price levels.
In addition, Checkmate describes the current Bitcoin price movement as “chopsolidation.” According to the analyst, “The swings are getting larger and more sustained.”
While the future remains uncertain, investors closely monitor market sentiment and key economic indicators. The coming days will be critical for the market, whether Bitcoin dips below $50,000 or stages a recovery.
Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.
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