Bitfinex analysts opined that Bitcoin might retest support around $48,900 as a potential local bottom after crypto markets dropped under $2 trillion.

Bitcoin (BTC), crypto’s bellwether asset, could reach lower levels as worldwide economic uncertainty wiped out over $570 billion in digital asset value since August began. Bitfinex analysts shared that Bitcoin could revisit support after plunging under $50,000 if bullish momentum remained unavailable. 

Following the latest downswing, BTC dominance rose as high as 60%, meaning that Bitcoin made up most of the market and was the leading asset for virtual currencies. As such, additional BTC price declines may also result in dips across the broader cryptocurrency ecosystem.

BTC’s 24-hour decline already triggered over $1.2 billion in crypto liquidations, per CoinGlass.

What’s driving the slump?

Global recession concerns dragged BTC down to $49,000 during a historically challenging month for cryptocurrencies. On average, BTC has shed 7.8% and 5.5% in August and September, respectively, in previous years.

However, Bitfinex analysts said the impulse drop was macro-driven, not caused by on-chain factors or technical reasons. 

“The crash was primarily, if not entirely, driven by macroeconomic factors. It was triggered by the Bank of Japan’s carry trade crisis, the disappointing US employment report, and a rise in unemployment,” Bitfinex analysts noted.

Bitcoin’s bounce and possible next move

While BTC began Aug. 5 with double-digit losses, the asset had retraced nearly 50% to the upside and traded over $54,500 at press time. Depending on macroeconomic developments, IntoTheBlock data suggests that gathering strength between $47,800 and $57,800 is crucial for Bitcoin. 

Looser monetary policies may also benefit BTC and cryptocurrencies. Experts and commentators, such as Wharton professor Jeremy Siegel, have called for an emergency rate cut from the U.S. Federal Reserve in response to the ongoing global liquidity crisis.