Bitcoin

Bitcoin made a remarkable recovery, attempting to establish support at $26,000 during the Wall Street opening on September 12. This swift rebound sparked excitement among traders after Bitcoin’s recent dip to three-month lows.

Trader Sentiments and Resistance Ahead

Prominent traders expressed their sentiments, with some eyeing a test of $27,000 and even $28,000 in the short term. However, Keith Alan, co-founder of Material Indicators, warned of substantial resistance levels ahead. These include the 21-Day Moving Average (MA), a potential Death Cross between the 50-Day and 200-Day MAs, and the 100-Day MA, which aligns with the range high. Alan emphasized the importance of Bitcoin maintaining support at $24,750.

Alan cautioned against expecting an uninterrupted surge to the top of the range, highlighting that clearing each resistance level requires strength from the bulls. He emphasized the need for the herd to regroup before tackling the next challenge.

Market Outlook for Q3 and Beyond

Looking ahead to the remainder of Q3, trading platform QCP Capital warned of potential selling pressure for Bitcoin and the crypto market. Various macroeconomic factors and industry-specific hurdles, including the US Federal Reserve’s interest rate decision, loom as bearish events. QCP anticipated a neutral market sentiment from mid-October onwards, suggesting the possibility of a “true bottom” for crypto in late October, followed by a bullish end to the year and a positive start to 2024.

The Grayscale Bitcoin Trust (GBTC) has been closing the gap with Bitcoin’s price, moving closer to a 1:1 ratio despite Bitcoin experiencing a three-month low. This article examines the evolving relationship between GBTC and Bitcoin, highlighting recent developments and their implications.

GBTC Approaching Parity

GBTC, a prominent Bitcoin investment vehicle, is currently trading at just a 17% discount compared to the BTC price. This narrowing discount is a notable development as GBTC inches closer to trading at the same price as Bitcoin itself.

GBTC’s resurgence can be attributed in part to BlackRock’s announcement of plans to file for the United States’ first Bitcoin spot price-based exchange-traded fund (ETF). This news bolstered GBTC’s prospects, especially as Grayscale was already engaged in a legal battle with U.S. regulators over transforming GBTC into a spot ETF.

SEC’s ETF Hurdle

Despite the positive outlook, it’s worth noting that the U.S. Securities and Exchange Commission (SEC) has yet to approve any spot ETF applications, recently postponing decisions on multiple such projects. Nevertheless, Grayscale secured a significant industry victory against the SEC, further supporting GBTC’s price performance.

The discount, which was once referred to as the “GBTC Premium,” has now reduced to just 17.17% as of September 9. This is the narrowest gap seen since December 2021, marking a substantial improvement from the significant negative discount that reached nearly 50% at one point.

Bitcoin’s Price Struggles

In contrast to GBTC’s positive momentum, Bitcoin’s price continues to face challenges, currently trading below $25,500. September historically tends to be a weak month for BTC/USD, often experiencing losses of up to 10%.

Some analysts believe that Bitcoin may see a turnaround in late November, historically marked as the “bull run launch” date during pre-halving years. This suggests the potential for renewed strength in Bitcoin’s price.

Cryptocurrency analyst Ali has identified an intriguing trend in the Bitcoin market. He reports that approximately 527,000 new Bitcoin addresses are being created daily, marking a new yearly high. This observation is based on data from Glassnode.

As #Bitcoin continues to fluctuate around $26,000, an interesting trend emerges. Around 527,000 new $BTC addresses are being created daily, representing a new yearly high!

For those unfamiliar, this suggests more people are showing interest in #BTC, even if its price has seen… pic.twitter.com/7O0NcoJjMz

— Ali (@ali_charts) September 8, 2023

Ali points out that the number of new Bitcoin addresses has been steadily rising, with a notable surge occurring between late August and early September when new addresses exceeded 510,000. In contrast, back in May, Bitcoin averaged around 390,000 new addresses daily. This recent increase is seen as a positive sign.

Positive Sign of Growing Interest

The surge in new addresses is viewed as a positive indicator of sustained interest and trust in the Bitcoin network. Despite Bitcoin’s recent price fluctuations and subdued trading, the network continues to attract new participants.

Additionally, IntoTheBlock, an on-chain analytics firm, reported a 38% increase in Bitcoin network fees during the week. This increase coincided with a rise in Ordinals inscriptions, reaching their second-highest daily volume.

Bitcoin Price Outlook

Bitcoin’s price has been fluctuating below the $26,000 level, currently sitting at $25,860. While it briefly surpassed $26,000 recently, sustained bullish momentum has been elusive. Bitcoin experienced a significant sell-off in the past week, breaching key moving averages.

Despite the technical challenges, there remains hope for a potential Bitcoin price recovery. The growing number of new addresses and increased network activity suggest ongoing interest in the cryptocurrency, despite recent market turbulence.

Bitcoin exhibited significant volatility leading into the Wall Street open on September 8th, driven by what is commonly referred to as a “short squeeze,” resulting in new highs for September.

BTC’s price fluctuations led to the liquidation of both short and long positions. After a surge that took Bitcoin above $26,400 following the previous day’s upward momentum, the cryptocurrency retraced its steps and fell back below the $26,000 mark at the time of reporting.

#Bitcoin doing exactly what I wanted to see — holding above the range highs.

Want to see this push higher today — and will cut the trade if we start dropping back into the range. https://t.co/oYTwnMG0JQ pic.twitter.com/AvtmyTNI4Z

— Jelle (@CryptoJelleNL) September 8, 2023

Late Traders Face Consequences

Late traders who chased the market experienced losses as a result of these rapid price shifts. Short liquidations amounted to $23.5 million on September 7th, while the long liquidation total for September 8th was yet to be determined.

$BTC Binance & Bybit Open Interest
Shorts got hunted as expected

note the OI added here with small price reaction and decreasing perp bid delta, this implies more shorts scaling into price on this second drive higher https://t.co/OULNlQrQof pic.twitter.com/X1hNlvjbdc

— Skew Δ (@52kskew) September 7, 2023

Market analyst Skew noted that shorts were “hunted as expected.” He highlighted that Bitcoin had managed to break above the September monthly open after multiple tests, and its ability to hold above this level would be crucial for maintaining a positive trajectory in September.

Historical Price Trends in September

Data from CoinGlass indicated that September historically tends to witness a nearly 10% downside correction in Bitcoin’s price, aligning with market expectations for 2023.

Trader Crypto Tony emphasized the significance of the $26,600 price level as a key threshold to cross for further positive momentum. He observed that while there was a rally from the $25,600 range low, it lacked the follow-through required to reach the range highs.

Bitcoin’s Technical Analysis

BTC/USD continued to hover around the 200-day exponential moving average (EMA), currently positioned at $25,674. Analyst Michaël van de Poppe suggested that the market might be experiencing the “final” price correction in this cycle, comparing it to past cycles and highlighting the significance of the 200-week EMA.

There's a level which #Bitcoin must hold in order to avoid a significant crash.

Bitcoin is currently holding onto a significant level of support. It's around the $25,500 barrier.

In the meantime, we're facing a month of destruction. September. What's next for Bitcoin? 👇… pic.twitter.com/nNI8GmxKuN

— Michaël van de Poppe (@CryptoMichNL) September 7, 2023

Bitcoin’s recent price action has been marked by volatility, driven by a short squeeze, with traders experiencing both gains and losses. The cryptocurrency market is closely watching key price levels for signals of future direction, while historical trends suggest a potential downside correction in September.

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.