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Will Bitcoin price rebound?
Historically, September is a challenging month, but in 43% of down Augusts, Bitcoin has rebounded, will it follow suit?
Bitcoin recently fell below the $60,000 resistance and 200-day EMA, currently trading near $58,000, down 8.44% for August.
BTC prices have fluctuated between $58,000 and $69,000 over the past five months, following an all-time high of nearly $74,000 in mid-March.
Potential catalysts for recovery include a possible Federal Reserve rate cut and the resolution of the FTX situation.
Bitcoin recently faced a significant setback after failing to break the critical $60,000 resistance level. The cryptocurrency sharply declined below the 200-day exponential moving average (EMA) and is currently hovering around $56,000, down 8.44% for the month of August.
Capital inflows into Bitcoin have tapered off in recent months, indicating that a balance may have been reached between investors taking profits and those experiencing losses.
The $60,000 mark has long been a substantial technical and psychological hurdle for Bitcoin, and the recent decline reflects the strong selling pressure that has repeatedly thwarted attempts to surpass this level. From a technical standpoint if $55,000 is broken- it could take prices to below $50,000, to August the 5th lows sparked by risk off mode after the NFP surprise.
The fact that Bitcoin is currently trading below the 200-day moving average is somewhat surprising. Historically, September has been one of the most challenging months for Bitcoin, with an average profitability of -6.18%. The broader market, including U.S. equities, also tends to struggle during this period.
Additionally, For the price to advance to new record highs, it first needs to surpass its all-time high of $73,750 reached in March.
Major institutions have been selling BTC adding to the sell off wave, The U.S. government currently holds 203,650 confiscated BTC, valued at approximately $12 billion. Although this may lead to the sell-off argument, it also may not be the case.
Deposits to exchanges often signal a potential intent to sell, whereas withdrawals usually indicate buying interest. It remains uncertain whether this deposit is a precursor to selling or part of a strategic maneuver.
On the positive side, Spot On Chain’s analysis sheds light on a historical trend: while September is often associated with downturns in the cryptocurrency market, it’s not a certainty. In nearly 43% of instances where August was a down month, September saw a positive turnaround.
With Bitcoin experiencing a decline this past August, there’s a chance that the worst might be behind it, possibly setting the stage for a recovery this month.
Although Bitcoin is closely linked to risk appetite, often climbing alongside rising U.S. equities, the cryptocurrency has recently faced an intense correction. This shift may be driven by investors turning their attention to the upcoming U.S. elections and exercising caution ahead of potential changes in Federal Reserve policy.
However, several factors could shape the market moving forward. An anticipated rate cut by the Federal Reserve could boost risk sentiment, potentially benefiting Bitcoin. Additionally, FTX's repayment of $16 billion in cash might also have a positive impact.
The FTX situation has impacted cryptos negatively, but its resolution may alleviate some of the current pressures.
Additionally recent selling activity from major players, such as the German government, Mt. Gox, and Genesis Trading, has seen over 170,000 BTC offloaded in July and August. With this selling pressure now possibly easing, Bitcoin might find the support it needs for a recovery. Prices first need to climb back above $65,000.
