What to Expect if Bitcoin Falls Below $57,000

Bitcoin's recent drop to $57,000 was surprising after its sharp decline below $65,000.

With this new reality, the market must react in some way. Here are three potential scenarios if BTC breaks below the critical $57,000 level.

Depreciation of the 200 EMA as support

If Bitcoin falls below $57,000, the 200-day exponential moving average (EMA) will no longer serve as a support level. This is a key technical indicator for assessing the overall trend.

Losing this support could push BTC into bear territory and potentially intensify the sell-off. As traders and investors lose confidence in Bitcoin’s ability to maintain key support levels, this could lead to a further decline in its price.

Growth in liquidations

Many buyers may try to exploit the decline and purchase BTC at the low prices around the $56,000 mark. However, if the cryptocurrency can’t hold that level, more liquidations could occur.

This could trigger additional sell orders due to buyers’ stop-loss activation, which will further lower the price. Increased selling pressure could make it harder for the Bitcoin price to stabilize, accelerating the decline.

Potential selling and market deadlock

If Bitcoin drops below $57,000, some institutional sales may halt due to lack of liquidity. This could lead to a horizontal market, with the leading cryptocurrency trading between $55,000 and $60,000 as buyers and sellers wait for more favorable conditions.

Conversely, if institutional investors continue to sell, BTC could fall to $50,000. Institutional investors, who hold a significant portion of the market, have a big influence on the price of Bitcoin. Continued selling could make it difficult for BTC to recover in the short term, potentially leading to a prolonged bear market.

Alexander Stefanov