Sellers outweigh buyers amid weak cryptocurrency appetite. Bitcoin falls.

The crypto market saw a brief spike in volatility when Bitcoin fell below the $58,000 support level. The leading cryptocurrency settled at around $56,541, dropping over 1% on Friday morning, with a 5% decline over the past week.

Data from Coinglass revealed that 32,057 traders were liquidated within the day, with total liquidations reaching $84 million. The largest single liquidation order, valued at $2.1 million, was for BTCUSD on Bybit.

Bitfinex analysts have warned that Bitcoin could face further declines, partly due to the anticipated Federal Reserve interest rate cut. They explained that while a 25-basis point reduction could benefit Bitcoin in the long term by increasing liquidity and easing recession fears, a larger cut could negatively impact its price.

Arthur Hayes, co-founder and former CEO of BitMEX, predicted on Friday that Bitcoin would fall below $50,000 over the weekend. He revealed he has placed a short position, betting on a market downturn.

Market activity showed that Bitcoin attempted to hit its 50% price retracement level on Monday at $59,560, based on a high in late July and a low in early August. However, it was rejected and dropped 5% over the next three days, retesting the $56,000 daily support level.

If Bitcoin closes below the $56,022 support, analysts suggest it could decline by 3.5% and retest the psychological barrier at $54,000. Technical indicators like the Awesome Oscillator (AO) and Relative Strength Index (RSI) are both trading below their neutral levels, signaling continued downward momentum.

Opinions on the depth of the correction vary. Leading crypto researcher Moustache predicts Bitcoin may bottom out at $57,000, basing his analysis on historical fractal patterns that identify key support and resistance levels.

Investors who short Bitcoin aim to profit from its price decline by borrowing, selling, and later repurchasing the asset at a lower price to return it. Technical indicators suggest that a 20% drop could push Bitcoin below $46,000, a price not seen since February 8. This outlook aligns with 10x Research, which suggests that the low $40,000 range could be a strong entry point for the next bull market.

Shorting allows investors to capitalize on Bitcoin’s price fall if they believe it’s overvalued or expect a downturn due to market trends or regulatory moves. It can also be used to hedge against future declines for those holding long positions.

Bitcoin spot ETFs in the U.S. recorded net outflows of $288 million on Tuesday, the largest since May 1. According to SosoValue data, BlackRock’s IBIT, the largest spot Bitcoin ETF, saw no significant daily flows. Grayscale’s GBTC, the second-largest, experienced $50.39 million in withdrawals, while Fidelity’s FBTC had the largest outflow at $162.26 million. Other significant outflows included $33.6 million from Ark and 21Shares’ ARKB, and $24.96 million from Bitwise’s BITB.

Smaller outflows were seen from ETFs managed by Franklin Templeton, VanEck, Valkyrie, and Invesco.