On August 5, Bitcoin (BTC) dipped below the critical threshold of $50,000, igniting a wave of panic among traders in the wake of a significant downturn in the Japanese stock market. According to Coinglass data, this led to liquidations totaling $1.08 billion in leveraged positions. The pressing question for traders now is whether this correction will deepen or if a relief rally is on the horizon. Analyst Rekt Capital suggested in a post on X that Bitcoin’s “downside deviation” could persist for approximately two months.
Some experts are forecasting a potential further decline. Alex Kuptsikevich, a senior market analyst at FXPro, shared with Cointelegraph that Bitcoin’s selling pressure could push it down to $42,000.
Daily cryptocurrency market performance. Source: Coin360
Bitcoin has broken out of its previous trading range, but initial breakdowns often turn out to be false signals, leading to abrupt reversals that catch traders off guard. Should this occur, Bitcoin might experience a short squeeze in the coming days.
What key resistance levels must bulls surpass to ensnare aggressive bears? Let’s delve into the charts for insights.
### S&P 500 Index Price Analysis
On August 2, the S&P 500 Index fell and closed below its 50-day simple moving average at 5,448, indicating a shift in short-term trend.
SPX daily chart. Source: TradingView
The index experienced a sharp drop on August 5; however, a positive sign is that buyers are stepping in at lower price levels. If the index can rise and hold above 5,265, it might rally towards the moving averages, which represent a crucial resistance point. Conversely, if the price retreats from these moving averages, it will suggest a bearish sentiment, leading bears to target the psychological level of 5,000.
### US Dollar Index Price Analysis
The US Dollar Index (DXY) declined from its 20-day exponential moving average of 104.22 on August 2 and fell below the channel’s support line.
DXY daily chart. Source: TradingView
Currently, the index is attempting to find support around 102.35. Buyers will aim to push the price back to the breakdown level. Should the price fall from this level, it would indicate that bears have successfully converted this support into resistance, raising the likelihood of a drop to 102 and possibly 101. To avert further decline, buyers must push and stabilize the price above the 20-day EMA.
### Bitcoin Price Analysis
Bitcoin’s recent sideways movement culminated in a drop below the strong support level of $55,724, signaling that traders are eager to exit positions.
BTC/USDT daily chart. Source: TradingView
Notably, the long tail on the candlestick indicates that bears are struggling to maintain lower levels, suggesting that selling pressure is diminishing. Bulls will aim to reclaim $55,724. If successful, it would indicate a market rejection of this breakdown, potentially triggering a short squeeze that could propel the BTC/USDT pair back to the moving averages. However, if bears manage to defend the $55,724 level, the pair might slide back toward the critical support of $49,000 and eventually down to $42,000.
### Ether Price Analysis
Ether (ETH) plummeted below the $2,850 support level on August 4, completing a descending triangle pattern.
ETH/USDT daily chart. Source: TradingView
On August 5, selling intensified, bringing prices closer to the psychological support of $2,000. A minor positive note is the bulls’ attempt to buy the dip, as indicated by the long tail on the candlestick. The RSI’s oversold levels suggest that a relief rally may be imminent. The ETH/USDT pair could target the breakdown level at $2,850. However, if it fails to reach this level, it may hint at insufficient buying interest from bulls, increasing the risk of a drop below $2,000.
### BNB Price Analysis
BNB’s (BNB) trading range between $495 and $635 resolved downwards on August 5, signaling a potential bear takeover.
BNB/USDT daily chart. Source: TradingView
Despite this, the long tail on the candlestick illustrates aggressive buying near the $400 mark. The RSI’s oversold condition indicates that selling may have been excessive in the short term, paving the way for a potential relief rally. The BNB/USDT pair will aim to rise above the breakdown level of $495; if accomplished, it would suggest that the market has rejected the breakdown. Should the price sharply decline from $460, it would signify that bears have turned this level into resistance, potentially dragging the pair down to $400 and then $350.
### Solana Price Analysis
Solana (SOL) has been fluctuating between $116 and $210 for several months, indicating a pattern of buying on dips and selling on rallies.
SOL/USDT daily chart. Source: TradingView
The price rebounded off solid support at $116, indicating active buying at lower levels. The SOL/USDT pair could aim for the moving averages, which present key resistance. If the price retreats from these moving averages, bears will likely target a drop below $116. If successful, the fall could reach $100 and then $80. Conversely, a close above the moving averages would suggest a reduction in selling pressure, allowing the pair to remain within the larger range for a few more days.
### XRP Price Analysis
XRP’s (XRP) drop below the 50-day SMA ($0.52) on August 5 suggests that the price may linger within the broad range of $0.41 to $0.64 for some time.
XRP/USDT daily chart. Source: TradingView
In such a range, traders typically buy dips near support and sell close to resistance. Bulls are likely to fiercely protect the $0.46 to $0.41 zone, as a breach below could trigger a decline to $0.35 and then $0.30. On the upside, a break and close above the 50-day SMA would signal the potential for continued range-bound action, with the XRP/USDT pair then possibly climbing towards resistance at $0.64.
### Dogecoin Price Analysis
Dogecoin (DOGE) dropped below the psychological support of $0.10 on August 5, indicating bear dominance.
DOGE/USDT daily chart. Source: TradingView
The price has since bounced off the $0.08 support, suggesting bulls are trying to halt the decline. The DOGE/USDT pair could rise to $0.10 and then reach the moving averages. A strong rebound would indicate the end of the downtrend, allowing the pair to enter a phase of consolidation. However, if the price falls from $0.10, it will signal a lack of buyer interest, increasing the risk of a decline to $0.06.
### Toncoin Price Analysis
Toncoin (TON) formed a double top pattern after dropping below $6.77 on July 25. The bulls’ inability to reclaim this level intensified selling pressure on August 2.
TON/USDT daily chart. Source: TradingView
On August 5, the TON/USDT pair reached crucial support at $4.72, which is expected to hold firm. Buyers have initiated a relief rally, potentially reaching $5.50 and then $6.36. The RSI’s oversold level also hints at a possible upward bounce soon. This optimistic scenario may be invalidated if the price declines from overhead resistance and falls below $4.72, which could lead to intensified selling down to around $3.50.
### Cardano Price Analysis
Cardano (ADA) fell below the significant support level of $0.32 on August 5, but buying interest emerged at lower levels, as indicated by the long tail on the candlestick.
ADA/USDT daily chart. Source: TradingView
The recent sharp sell-off has pushed the RSI into oversold territory, suggesting a potential relief rally may be forthcoming. This recovery could target the moving averages, where sellers are likely to re-enter. If the price sharply declines from the moving averages, the ADA/USDT pair could drop to the support level at $0.24. Buyers will need to push the pair above the downtrend line to indicate a potential trend reversal.
This article does not provide investment advice or recommendations. Every investment and trading decision carries inherent risks, and readers should conduct their own research prior to making any decisions.