How far can the Bitcoin price fall?

There is currently a huge crash going on in the financial markets, which is also affecting the crypto market. Bitcoin (BTC) dropped below the $50,000 level this morning. This makes many investors wonder if the worst is over. And if not, how low can the Bitcoin price go? Let’s take a look at the possible scenarios.

Why is the Bitcoin price falling?

As we speculated last week, the Bank of Japan (BOJ) has raised interest rates from 0 percent to 0.25 percent. While this may seem harmless at first, it has significant implications for US markets.

Traders are borrowing Japanese Yen at low interest rates to invest in US assets. This policy change has caused markets to take a beating. But what does this mean for Bitcoin?

$48,000 is a crucial level

This morning’s crash came as a bit of a surprise. Bitcoin failed to hold the support levels of $60,000 and $57,000 and eventually fell below $50,000. With this, the Bitcoin price is recording a so-called ‘lower low’, which is generally seen as a bearish pattern.

According to CryptoQuant analyst Axel Adler Jr., BTC has now fallen below 9 percent of the average purchase price of active investors for the fifth time. He points to $48,000 as a key support level.

How far can the Bitcoin price fall?

Although the Bitcoin price is currently above $51,000, it is possible that we will drop below $50,000 again and test the $48,000 level. This level has been important for the Bitcoin price for years.

According to Charles Edwards of the Capriole Fund, it is crucial for Bitcoin to establish a support level around $52,000. However, if BTC drops below $50,000 and stays there, the next major support level could be around $44,000. These low $40,000 levels served as a consolidation area from December 2023 to February 2024.

On-chain data also provides an indication of which levels are important. This data shows that 6.39 million addresses hold approximately 2.38 million BTC at an average purchase price of $42,446. A retest of this level would represent an additional 18 percent drop.

It would be naive to think that this is the bottom and that Bitcoin will rise straight from here to new all-time highs. We should always remain objective and consider the worst-case scenario. The indicators point to possible lower prices. If Bitcoin fails to stay above the $50,000 level, the first price target is $48,000. If this level falls, we should focus on the lower $40,000 levels.

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