In the wake of a global market tumble on ‘Black Monday’, the crypto market is currently experiencing a significant downturn. Bitcoin has dropped nearly 30% from the high of $70,000 to low of $49,700 on 5th August within 10 days. Following BTC, Ethereum and several other altcoins have also fallen by 50% or more in this free fall.Â
This sharp decline was driven by several converging factors – including geopolitical tensions, recession fears, and the crash of Japan’s Nikkei index. These elements have shaken investor confidence and reduced the availability of funds for leveraged investments further contributing to market instability.
Additionally, the long-awaited Mt. Gox distributions and a major market player Jump Trading offloading large positions are increasing selling pressure even further. This market condition has led Bitcoin to a bearish trend and its drop below $50,000 describes that its current price is at an undisclosed life support.
In this article, we will analyze the current Bitcoin (BTC) and Ethereum (ETH) price and find out potential support levels and whether you should buy the dip.
Price Analysis Bitcoin (BTC) & Ethereum (ETH)
BTC
On 26 July, BTC was trading within the 5 months range but this latest price movement has led it to break the lower range. While the BTC price has created a new lower range support near $57,000 in the last shakeout of early July, it has been broken with a significant higher selling-pressure and BTC retracing to as low as $49,600.Â
BTC Price Analysis, August 5 – TradingView
With a strong re-bounce from the sub-50K level, BTC is currently trading near $51,000 ahead of the US opening session, at the time of publishing of this report. Market players are expecting that if the US weekly opening session further fuels the bloodbath, BTC is likely to revisit even lower until a major support of $47,000.Â
ETH
Similar to BTC, ETH has also broken its major support at $2900 and retracted to the low of $2112 in the early morning on 5th August. ETH currently has a major support within the $2100 to $2200 range. Its unlikely for ETH to drop below this range as the majority of the negative sentiment is now priced-in. ETH price is currently trading near $2,260 – down over 16% in the past 24 hours.Â
ETH Price Analysis, August 5 – TradingView
However, reclaiming the range above $3,000 currently seems a hard-climb for ETH. Despite the approval and existence of ETF, the ETH market has been showcasing heavy pressure throughout the year. While reaching as high as $3,980 on the day of ETF approval, ETH has since failed to surge above $3,600 when the ETF went live. With the latest market turmoil, ETH has lost all its gains attained since the beginning of this year.Â
BTC and ETH Freefall: Should You Buy This Dip?
Buying the dips in markets like this could be beneficial only if you believe in the long-term gains of cryptocurrencies. The current dip has brought a golden opportunity for investors to acquire BTC, ETH or other altcoins and benefits with its long-term price surges. While both these assets have fallen double digits since Sunday evening, it’s unlikely to show any further lower-volatility ahead of the US market opening.Â
Historically, market downturns have sometimes been followed by significant recoveries providing substantial returns for those who invested during the lows. If you have a long-term investment horizon and can afford to wait out the volatility, this could be a good chance to build your portfolio at a lower cost.
Conclusion
It’s important to be cautious as the election scenario is unpredictable currently with economic fallout due to the increased tension between Israel and Iran. In such geopolitical situations, market reactions can be unpredictable and assets could decline further. Its recommended to have a well-diversified portfolio and only invest money that can afford to lose. The forthcoming week will be closely seen by market players.
Also Read: Crypto Free Fall: Any chance for a Bitcoin Bull Run in 2024?
