Bitcoin Bloodbath On The Way? Market Indicators Point to Crash

Wall Street was all red on Tuesday, September 3, with top indices like the S&P 500 declining significantly. This bloodbath sipped into the crypto market, pushing Bitcoin down by 4.5% to $56,500 with massive long liquidations.

As a result, concerns about a possible 75% crash in Bitcoin have emerged. Analysts have warned that Bitcoin may face even more significant challenges in the coming days.

Bitcoin Faces Major Sell-Off: Liquidations Spike

On Tuesday, the S&P 500 took a hit, falling over 2% and causing a ripple effect across the financial markets. This decline came right after the release ofa US ISM Manufacturing PMI reading of 47.3.

For context, the PMI is a key indicator that measures the health of the US manufacturing sector. A reading below 50 suggests that the sector is contracting, which can signify an economic slowdown. This concern led to stock selling offs, crashing the S&P 500 index.

Bitcoin, closely tied to the performance of traditional assets, also saw a sharp decline, dropping by 4.5% and settling around $56,500.This drop led to a surge in BTC liquidations, with $246.64 million in leveraged positions at risk of being wiped out.

Crypto analyst Ali Martinez highlighted this trend in an X post on September 3. He noted that Bitcoin's price is trading below the critical $56,840 level, leading to over $246 million in liquidations.

$246.64 million will be liquidated if #Bitcoin drops to $56,840! pic.twitter.com/Z0tRcZEDAU

- Ali (@ali_charts) September 3, 2024

Further, Martinez warned that investors could face significant losses if Bitcoin continues to slide. He added that the Stochastic RSI, a key technical indicator, suggests that Bitcoin may be on the verge of a bearish trend.

Historically, similar signals have preceded significant corrections, with Bitcoin experiencing up to 75% declines.

In response, a user said, [It] Would be beautiful to sweep the longs at $56.8k before propelling upwards and taking out the short liquidations at $70k."

Analysts Warn of Further Downturns for BTC

As Bitcoin struggles to maintain its value, concerns about its future trajectory are growing. Veteran trader Peter Brandt has turned bearish on Bitcoin, citing a lack of buying momentum.

Bitcoin $BTC
Three things to note
1. Ongoing series of lower highs, lower lows
2. Downward slope of lows shows lack of energy
3. No other post halving time in BTC history when new ATH has taken this long
Make of all this what you might pic.twitter.com/8XjRAKpcbb

- Peter Brandt (@PeterLBrandt) September 3, 2024

In an X post, he pointed out that Bitcoin's recent market structure shows a series of lower highs and lower lows, indicating a potential downward spiral.

In addition, Peter noted that Bitcoin's current price stagnation has been the longest period since its last halving. He mentioned that his method of measuring crypto cycles differs from most analysts.

Meanwhile, Bitcoin ETF outflows spiked on Tuesday, with over $287 million being pulled out of the market. This outflow reflects growing caution among institutional investors, who are moving away from riskier assets like Bitcoin.

The drop in Bitcoin's price is critical as all eyes turn to the US Federal Reserve's upcoming interest rate decision.

According to Fortune, the Fed is expected to cut rates by 50 basis points on September 18, which could further impact BTC price. With key indicators signaling a potential downturn and institutional investors pulling out, the road ahead for Bitcoin looks uncertain.

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