‘Extreme fear’ if Bitcoin drops below $ 40,000 … and then ricochets

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Bitcoin’s price fell below $ 40,000 for the first time in six weeks.

The decline occurred towards the end of the day on September 21, with BTC prices falling 16% from nearly $ 47,300 at the beginning of the day and marking a local low of $ 39,650 at around 9 p.m. UTC. The move marked a 25% retracement from local BTC highs above $ 50,000 on September 7th.

However, the pullback comes after Bitcoin has gained more than 80% since it hit $ 29,300 on July 20 and then peaked in early September. Bitcoin has since bounced back and is trading just over $ 42,000.

Bitcoin wasn’t the only one to suffer a sharp drop in prices on September 21, as 29 of the top 30 crypto assets by market capitalization suffered a 24-hour downdown, according to CoinGecko.

According to the Crypto Fear & Greed Index, the bearish price movement coincides with the mood of “extreme fear” across the market. Just a month ago, the metric was signaling “extreme greed”.

Some of crypto’s outspoken critics have taken up the slump to make apocalyptic predictions for the markets, with “Mr. Whale ”announces to its 300,000 Twitter followers that“ the bear market is here ”.

The notorious Goldshill Peter Schiff interfered, forecast that the growth of altcoins will soon “overwhelm demand” until “the crypto bubble bursts while” Bitfinexed believes Chinese real estate giant Evergrande’s credit troubles will threaten Tether’s reserves and the broader crypto markets with systemic risk.

The drop in prices also came after SEC chairman Gary Gensler, who compared stablecoins to poker chips and called for tightening regulation of the sector.

However, much of Crypto Twitter is reporting eager dip buying activity in response to market moves, with some analysts claiming that Bitcoin is on the verge of a rebound should prices stay above local support.

Galaxy Digital CEO Mike Novogratz appeared on CNBC and offered that he won’t feel “nervous” unless BTC doesn’t hold up above $ 40,000 and Ether crashes below $ 2,800. “As long as the [price levels] hold on, I think the market is in good shape, “he added.”

Novogratz isn’t the only one viewing the roughly $ 40,000 level as a critical support zone for BTC.

Related: Ethereum forms a double top? The ETH price drops 12.5% ​​due to fears of an Evergrande contagion

Looking to the fourth quarter, influencer Lark Davis notes that the final quarters of 2013 and 2017 both rallied more than 300% as past bull cycles increased, and speculated on the possible admission of a Bitcoin Exchange Traded Fund (ETF) to the US could drive prices up again.