Bitcoin fell below the psychological level of $50,000 on Aug. 5 as panic gripped traders following the crash in the Japanese stock market. Coinglass data shows $1.08 billion in liquidations in leveraged positions or collateral trades. Will the correction deepen, or is it time for a relief rally to begin? That is a big question for traders.

Popular analyst Rekt Capital said in a post on X that Bitcoin’s “downside deviation” could last for about two months. Some analysts believe the correction could deepen further. FXPro senior market analyst Alex Kuptsikevich told Cointelegraph that Bitcoin’s selling could sink it to $42,000.

Bitcoin’s sideways price action resolved to the downside with a drop below the solid support of $55,724, signaling that the traders are rushing to the exit. However, the long tail on the candlestick shows that the bears are struggling to sustain the lower levels. This suggests that selling dries up at lower levels.

The bulls will try to make a comeback by pushing the price back above $55,724. If they manage to do that, it will signal that the markets have rejected the breakdown. That may result in a short squeeze, pushing the BTC/USDT pair to the moving averages. If bears want to maintain control, they will have to fiercely guard the $55,724 level.

If they do that, the pair may again slide toward the vital support at $49,000 and eventually to $42,000.

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