On September 8th, Bitcoin’s price fell by approximately 1.75%, dropping to nearly $25,850. This decline can be attributed to profit-taking by traders who had seen recent gains and long liquidations in the derivatives market.
Technical Correction and Market Indecisiveness
Throughout September, Bitcoin’s price exhibited a lack of clear direction, with small gains and losses, amidst decreasing liquidity supply. Traders’ uncertainty stemmed from factors such as the ongoing delay in a spot Bitcoin ETF and concerns surrounding the Federal Reserve’s upcoming interest rate decision.
Bitcoin’s price had been trading within a tight range, marked by $26,450 as resistance and $25,550 as support. Traders had been following a strategy of buying at support levels and selling at resistance levels. The lack of buying momentum near the $26,450 resistance level likely contributed to the September 8th selloff.
Increase in Exchange Reserves
Another factor influencing the price decline was a slight increase in Bitcoin reserves held on cryptocurrency exchanges. The rise in exchange reserves from 2.03 million to 2.05 million BTC in September added potential selling pressure to the market.
The September 8th selloff triggered a wave of long liquidations in the derivatives market, resulting in $7.78 million of long positions being liquidated. Traders were forced to sell Bitcoin to cover their losses, intensifying selling pressure.
Bitcoin’s Future Price Direction
From a technical perspective, the September 8th price drop pushed Bitcoin below its 50-4H exponential moving average (50-4H EMA), increasing the likelihood of further downward movement toward the $25,550 support level. This support level is characterized by a horizontal level and a descending trendline.
Conversely, if Bitcoin can reclaim the 50-4H EMA as support, it may have the potential to retest the $26,000 level, potentially leading to a rally toward the 200-4H EMA, which is near $26,975.