Bitcoin Drops 7% to $74.5k, Bear Market Fears Rise

Bitcoin's price fell below the $80,000 mark on April 6, reaching $74.5k on April 7, causing significant market turbulence. This decline has raised questions about whether Bitcoin is entering a bear market, as its resilience has been tested. Michael Saylor’s strategy remained inactive during this recent dip, which has garnered attention for its lack of market activity.

The bearish market structure was reinforced when the recent lower low at $78.6k was breached on April 7. The price has not yet formed a bottom and bounced, indicating that a new swing low has not been set. The Relative Strength Index (RSI) on the daily chart was falling, showing growing bearish momentum. However, the On-Balance Volume (OBV) did not indicate overwhelming selling pressure, unlike the end of February. This provided a faint glimmer of hope, as the 61.8% Fibonacci retracement level at the $74.4k region was about to be tested as support once more. It remained unclear if BTC bulls could defend this level.

On the 4-hour chart, there was some space for hope. The $75.1k and the $80k levels appeared to form a short-term range for Bitcoin. Both the OBV and the RSI have made higher lows during the recent retest of the range’s low, revealing potential for some bullish momentum in the short term. However, this momentum was not strong enough to reverse the downtrend or the recent losses.

The idea of consolidation came from the 1-month liquidation heatmap. In the second half of March, BTC traded above the $82k short-term support, allowing time for a build-up of long liquidations around $81.1k. Similarly, the price of Bitcoin might stabilize above $74.5k to build up long liquidations to the south before hunting them down. Traders should be prepared for BTC to dive below $74.5k, as uncertainty was rising each day.

On Tuesday, Bitcoin's price slipped to around $77,000, down from earlier levels near $80,000. This decline comes amid broader market uncertainty, with investors evaluating the impact of trade policies and economic health on risk assets. The leading cryptocurrency has generally fallen this year, with recent drops attributed to concerns over tariffs, inflation, and economic stability. Despite these challenges, Bitcoin has shown signs of stabilization, with the $80,000 level now serving as a critical technical fulcrum. If Bitcoin can reclaim this level, it may pave the way for a bullish push toward new short-term highs. Conversely, if the price fails to hold above $74,000, the next significant support level is around $68,000.

Analysts have identified several possible scenarios following Bitcoin's drop below $80,000. One scenario is a correction, where the price stabilizes and potentially rebounds. Another possibility is a deeper recession, as warned by BlackRock CEO Larry Fink, who cautioned about the US economy's potential downturn. However, it is essential to note that Fink's warning is a forecast and not a confirmed economic event.

The market is currently at a crossroads, with investors and analysts closely monitoring Bitcoin's price movements. The next few weeks will be crucial in determining whether the recent drop is a temporary setback or the start of a more prolonged decline. As the market navigates this uncertainty, it is essential to stay informed and consider various scenarios to make well-informed investment decisions.