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.

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

Invalidation of 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. A loss of this support could push BTC into bearish territory and potentially intensify the selloff. As traders and investors lose confidence in Bitcoin's ability to hold key support levels, this could cause its price to fall further.

Growth in liquidations

Many buyers may try to take advantage of the decline and buy BTC at the low prices around the $56,000 mark. However, if the cryptocurrency cannot hold this level, more liquidations may follow. This could trigger additional sell orders due to activation of buyers' stop-losses, further pushing the price down. Increased selling pressure could make it harder for Bitcoin's price to stabilize, accelerating the decline.

Potential sales and market impasse

If Bitcoin falls below $57,000, some institutional selling may stop 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 large 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.