Bitcoin

Bitcoin (BTC) suffered a notable decline of 8.6% in August, with the cryptocurrency starting on a weak note in September. The price fell below $58,531 on September 1, marking a more than 2% drop on the first day of the month. This decline was exacerbated by a poor monthly close, leaving bulls struggling to stem further losses.

September’s Historical Weakness for Bitcoin

BTC price data from TradingView revealed that Bitcoin reached a low of $57,230 on Bitstamp, a level not seen since August 16. The typically thin trading volumes during the weekend contributed to the downward pressure, culminating in an August finish that underperformed its average gain of 1.75%. Historically, September has been unfavorable for Bitcoin, with average losses of 4.5%, a trend that appears to be continuing this year.

BTC/USD 1-hour chart. Source: TradingView

Market Predictions and Liquidity Concerns

Trader Crypto Chase indicated potential trouble ahead, stating that if Bitcoin fails to hold between $55,500 and $56,500, it could fall to around $51,000. Meanwhile, fellow trader Exitpump observed aggressive short selling at local lows as the weekly close approached.

BTC/USD monthly returns (screenshot). Source: CoinGlass

Rekt Capital noted that Bitcoin is currently testing the “Channel Bottom” on the weekly chart. For a positive outlook, Bitcoin would need to close the week above $58,450 to confirm this level as support.

Short Squeeze and Liquidity Hunts

Liquidity data from CoinGlass highlights the ongoing bearish sentiment, with Bitcoin slicing through multiple support levels in its recent decline. Trader CrypNuevo suggested that both upside and downside liquidity hunts could be in play this week. He recommended waiting for a potential drop to $56,600, where he plans to place a long order in anticipation of a price rebound. CrypNuevo also targets $61,300 for a potential upside liquidity grab.

Bitcoin (BTC) hashprice is currently at its lowest level since the March 2020 crash, potentially marking a significant buying opportunity, according to recent insights from on-chain analytics platform CryptoQuant.

Bitcoin Nearing a Bottom?

CryptoQuant’s latest analysis suggests that BTC price action may be near long-term lows, as miners continue to face profitability challenges post-halving. Hashprice, which measures the cost per terahash for miners, is at a conspicuously low level, reminiscent of conditions seen before previous major price surges.

BTC/USD vs. Bitcoin hashprice (screenshot). Source: CryptoQuant

The report notes that historically, low hashprice periods have often coincided with Bitcoin price bottoms, hinting that the current slump may signal another potential upward breakout.

“The highlighted sections in the chart indicate periods where the hashprice dropped to lower levels, corresponding to times when Bitcoin prices were also at or near their lowest points,” explained CryptoQuant contributor Woo Mink-yu. “This suggests that the current low hashprice might indicate that Bitcoin’s price is near a bottom as well.”

Miners Return to Accumulation

Despite ongoing profitability struggles, Bitcoin miners appear to be accumulating rather than selling their BTC reserves. Recent data confirms that miners’ collective Bitcoin holdings have increased, reaching 1,815,832 BTC.

Bitcoin miner wallet reserves. Source: CryptoQuant

This accumulation follows a brief period of miner outflows in July and indicates growing confidence among miners in the long-term price outlook for Bitcoin.

Mining Difficulty Near All-Time Highs

Bitcoin’s mining difficulty has also increased by 3% this week, bringing it close to its all-time high of 90.66 trillion, according to monitoring resource BTC.com. The rise in difficulty highlights the continued strength and resilience of the Bitcoin network, despite the current hashprice challenges.

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CryptoQuant CEO Ki Young Ju emphasized that the U.S. mining sector appears to be stabilizing, with costs around $43,000 per BTC. He noted that unless prices drop below this level, hash rates are likely to remain stable.

The amount of Bitcoin held on cryptocurrency exchanges has reached a new yearly low, sparking discussions among analysts that this trend could serve as a catalyst for Bitcoin’s price to successfully retest the $60,000 level. As demand grows, the reduced selling pressure might pave the way for a bull market.

According to an Aug. 29 analysis by CryptoQuant contributor Gaah, Bitcoin reserves on exchanges have decreased by approximately 12.9% since the beginning of the year. This decline leaves a total of 2.62 million Bitcoin across all major exchanges. The analyst highlighted that this shift in Bitcoin from exchanges to cold wallets suggests that investors are increasingly committed to holding the asset for the long term, reflecting optimism about its future price potential.

The year-to-date high for Bitcoin supply on exchanges was just over 3.05 million Bitcoin. Source: CryptoQuant

The dwindling supply of Bitcoin on exchanges aligns with recent market predictions that Bitcoin’s price could rally in the fourth quarter of 2024. Gaah further noted that the increase in long-term holders could lead to a more resilient market, less susceptible to panic selling. When there is less Bitcoin available for immediate sale on exchanges, liquidity decreases, which can bolster prices if demand remains strong.

Pseudonymous crypto trader MartyParty pointed to the “ultra-low” Bitcoin reserves, indicating that “something is happening.” Similarly, the crypto commentator Bitcoin for Freedom shared with their 74,800 X (formerly Twitter) followers that the recent removal of 56,000 Bitcoins from exchanges in just one week could create a supply shock, driving prices upward.

Bitcoin is down 0.30% over the past 24 hours. Source: CoinMarketCap

At the time of writing, Bitcoin is trading at $58,970, having briefly retested the $60,000 mark earlier in the day, according to CoinMarketCap data. Long-term Bitcoin holders have reportedly invested over $10 billion in the asset and have significantly reduced selling activity since the price declined from its peak of $69,000.

Bitcoin (BTC) is facing increased downward pressure as it dropped below the critical 200-day EMA for the third time in August, raising concerns among traders. After a recent correction from $65,000 to $58,000, the cryptocurrency’s ability to recover in the near term is being questioned.

Immediate Recovery at $58K?

Currently hovering above $60,000, Bitcoin could experience a short-term bounce if market volatility swings in its favour. BTC is showing higher highs and higher lows on the 4-hour chart, and it remains within an ascending pattern, offering a glimmer of hope for bulls. Should Bitcoin reclaim $61,120 quickly, it might renew bullish momentum and push towards $65,000.

BTC/USDT on the 4-hour chart. Source: TradingView

Data from CoinGlass indicates that the open interest-weighted funding rate for Bitcoin remains positive, reflecting some bullish interest from derivatives markets. However, the prospect of a strong recovery remains uncertain as September approaches — historically a challenging month for Bitcoin, with the lowest return on investment (ROI) average over the past decade.

Risk of Correction to $54K

If Bitcoin fails to maintain its $60,000 support, a more substantial correction down to the $54,000-$52,000 range could be on the horizon. A liquidity sweep at $53,500 would add to the pressure. Earlier this month, when Bitcoin dipped to $49,000, it closed just above $54,000, indicating strong buy orders around that range.

BTC/USDT on 1-day chart. Source: TradingView

Bitcoin researcher Axel Adler highlights $54,700 as a crucial level, marking a 15% deviation from the short-term holders’ cost basis. Falling below this key level could increase bearish sentiment and lead to further declines.

Possible Dip to $49K

In a worst-case scenario, Bitcoin could drop to $49,000, representing an 18% correction over the coming weeks. This level would test a long-term order block between $47,000 and $50,500, supported by both the 50-day and 100-day EMAs. Historical data shows that price levels above $45,000 have strong support, which could act as the final defense before a potential bullish recovery in Q4.

Bitcoin’s price pushed towards $61,000 on Aug. 29, following the release of US macroeconomic data that caused minimal market disruption. The cryptocurrency gained 3% on the day, with local highs reaching $60,845 on Bitstamp.

The US jobless claims and GDP figures, which closely matched expectations, helped Bitcoin to recover from recent lows. The data did not significantly alter market expectations, with traders still betting on a potential 0.25% interest rate cut by the Federal Reserve in September.

BTC/USD 1-hour chart. Source: TradingView

QCP Capital, a trading team, suggested that any dip in both equities and cryptocurrencies would likely be short-lived. With the Fed seemingly ready to initiate a rate-cutting cycle, increased liquidity could push risk assets, including Bitcoin, higher. According to the firm, this shift in monetary policy would mark the beginning of a new phase for Bitcoin and other cryptocurrencies.

Fed target rate probabilities. Source: CME Group

On the technical front, BTC/USD showed signs of resilience, continuing a successful support retest on weekly timeframes. Popular analyst Rekt Capital noted Bitcoin’s formation of higher lows since early July, indicating continued upward momentum.

However, market analysts remain cautious. Trader Jelle emphasized the importance of reclaiming the $62,000 level, which could signal a more sustained bullish trend. Despite the optimism, he warned that the trading environment remains “predatory,” urging caution among investors.

Source: Jelle

As Bitcoin approaches these critical levels, the market remains focused on the potential for a stronger upward move, particularly if liquidity conditions improve. Key resistance at $65,000 will be closely watched in the days ahead, as the cryptocurrency seeks to regain its previous highs.

Bitcoin’s price action has traders anticipating key developments as the U.S. Federal Reserve’s annual Jackson Hole symposium approaches. Bitcoin (BTC) hovered around intraday highs of $61,000 on Aug. 23, with markets eagerly awaiting a speech from Fed Chair Jerome Powell.

Traders Eye Fed’s Interest Rate Decision

At the heart of the event is Powell’s upcoming address, scheduled for 10 a.m. Eastern Time. Market participants are closely watching for potential clues on the Fed’s future financial policies, particularly the likelihood of interest rate cuts. Analysts and traders are now pricing in a 100% chance that the Fed will begin cutting rates in September, which could be a bullish signal for Bitcoin and other risk assets.

BTC/USD 1-hour chart. Source: TradingView

“The question is no longer whether the Fed will cut rates or not,” commented The Kobeissi Letter on X (formerly Twitter). “The question is, will they cut rates by 25 or 50 basis points in September?” Current data from the CME Group’s FedWatch Tool shows that the odds are leaning toward a smaller 0.25% rate cut.

Fed target rate probabilities. Source: CME Group

However, not everyone expects Powell’s speech to contain surprises. Former Fed official Lou Crandall told CNBC that he doesn’t anticipate any major revelations, as the Fed may prefer to avoid providing guidance so far ahead of the next policy meeting.

BTC Price and Market Dynamics

Despite the potential for rate cuts to boost liquidity for risk assets, history suggests that Bitcoin’s price might not react immediately. In 2019, the last time the Fed cut rates, BTC’s price saw a slight decline before the COVID-19 pandemic and subsequent economic measures fueled a major bull run.

BTC/USD vs. Fed funds rate. Source: Luke Martin/X

Currently, Bitcoin continues to trade within a narrow range, facing resistance at the $62,000 level. Monitoring resource CoinGlass highlighted an additional block of liquidity at $61,435, contributing to the price stagnation. Traders are watching closely, with many predicting that a breakout could see BTC surge to $64,000–$65,000, while a rejection could lead to further consolidation.

Bitcoin is currently at a pivotal juncture, with analysts warning that it must reach and maintain $62,000 to avoid a potential fall to $49,000. According to a technical market update from the crypto exchange Kraken, Bitcoin’s price action suggests a corrective pattern rather than a strong bullish reversal. As of Aug. 21, Bitcoin is trading at around $60,691, having not surpassed the $62,000 mark since Aug. 9.

The report highlights that Bitcoin is trading near its 200-day exponential moving average of $59,500, which weighs more heavily on recent price data. Kraken analysts argue that Bitcoin needs to “clear resistance” at $62,000 to prevent retesting the $49,000 level. The last time Bitcoin fell below $50,000 was on Aug. 5, when it hit $49,842, a day dubbed “Crypto Black Monday.”

If Bitcoin were to rise to $62,000, it could trigger the liquidation of $1.04 billion in short positions, according to data from CoinGlass. However, sentiment among traders is varied, with some expressing concern about the potential for a deeper correction if the resistance level is not cleared.

Bitcoin is down 8.43% over the past 30 days. Source: CoinMarketCap

Pseudonymous crypto trader Profit Blue echoed this sentiment, stating on X (formerly Twitter) that if Bitcoin breaks above $62,000 with strength, it could target a new all-time high. Conversely, failure to hold this level could result in a drop below $50,000.

Not all traders are pessimistic, though. Some believe that the recent slump was merely a buying opportunity. Crypto commentator, Alex Becker told his followers that the chance to buy Bitcoin below $60,000 is gone, while trader PlanB noted that Bitcoin’s current price action mirrors previous bull runs in 2017 and 2020/2021.

As Bitcoin continues to hover around the $60,000 mark, all eyes are on whether it can break through the critical $62,000 resistance and avoid a potential retracement to $49,000.

Bitcoin’s price has been stuck in a tight range, struggling to gain momentum despite a recent recovery. On August 21, Bitcoin (BTC) saw a 3.62% price increase, closing the day above the 200-day EMA for the first time since August 13. However, it faces stiff resistance around the $60,000-$62,000 range, with no clear breakout in sight.

Bitcoin’s Battle with Liquidation Clusters

One of the key factors contributing to Bitcoin’s stagnant price action is the presence of liquidation clusters. These clusters, located above $60,000 and below $58,000, have acted as barriers, preventing the price from making significant moves in either direction. Over the past week, $40 million in liquidations have occurred, yet Bitcoin remains confined within this range.

Bitcoin liquidation heat map. Source: Coinglass

Currently, the most critical liquidation cluster lies between $61,500 and $62,500, with over $300 million at risk if Bitcoin breaches this range. Failure to hold above $60,000 could lead to another bearish pullback, potentially pushing Bitcoin down to the $58,500 level, triggering $180 million in further liquidations.

Declining Retail Investor Demand

Another major obstacle to Bitcoin’s upward momentum is the decline in retail investor demand. Data shows a gradual decrease in retail activity since May 2024, particularly for trades under $10,000. This lack of interest from smaller investors has made it difficult for Bitcoin to sustain any significant rallies.

Bitcoin Retail Investor demand 30D change. Source: Cryptoquant

Neutral Funding Rates and Low Volatility

Adding to the sideways price action is the lack of significant futures and perpetual trading activity. Bitcoin’s open-interest weighted funding rate currently sits at a neutral 0.0037%, indicating that neither long nor short traders hold a dominant position. This neutral stance has kept Bitcoin’s price relatively stable.

Bitcoin OI-Weight Funding Rate chart. Source: Coinglass

Historically, August has been a quiet month for Bitcoin, with an average return of just 1.98%. These factors combined have kept Bitcoin stuck in a tight range, with the current price hovering around $61,228 and a trading volume of $36.5 billion in the past 24 hours.