Bitcoin falls below $40K and then bounces back quickly

The drop took place near the close of the day on Sept. 21, with BTC having drawn down by 16% from nearly $47,300 at the start of the day, to tag a local low of $39,650 at roughly 9 pm UTC.

Bitcoin falls below $40K and then bounces back quickly

However, Bitcoin was not alone in suffering a sharp price decline on the day, with 29 of the top 30 crypto assets by market cap suffering a 24-hour drawdown according to CoinGecko.

According to the crypto Fear & Greed Index, the bearish price action coincides with the sentiment of extreme fear across the market. Just one month ago, the metric signaled extreme greed.

The price plunge also came in the aftermath of SEC chairman Gary Gensler likening stablecoins to poker chips and calling for tightening regulation of the sector. However, much of Crypto Twitter reports zealous dip-buying in response to the market action as always, with some analysts asserting Bitcoin is poised for recovery should prices hold above local support.

Galaxy Digital CEO Mike Novogratz appeared on CNBC to offer that he won’t be feeling “nervous” unless BTC fails to hold above $40,000 and Ether crashes below $2,800. “As long as those [price levels] hold, I think the market’s in good shape,” he added.“

Novogratz is not alone in eying the roughly $40,000 level as a critical support zone for BTC, with popular analyst William Clemente III recently asserting that Bitcoin is unlikely to fall below $39,000 due to its liquid supply floor and real-time scarcity.

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