Following a sobering 10.5% downturn last week, Bitcoin (BTC) remains perched on the precipice of uncertainty, hovering in thin bands around $26,000. Traders are now cast their gaze towards the remainder of the week, highly anticipating American data releases and potentially influential comments from Fed Chair Jerome Powell. The question lingers; will these events drive long-dated US government bond yields to their loftiest point in decades, instigating further jitters in the crypto and US stock markets?
The quiet preceding these critical developments pairs with a lull in optimistic Bitcoin narratives, such as the Bitcoin Exchange Traded Fund applications filed by financial heavyweights such as BlackRock, Fidelity and Vanguard. Without fresh stimuli, Bitcoin remains susceptible to further short-term dips.
However, it would be amiss to overlook Bitcoin’s hard-won 56% uptick achieved this year, despite the recent 18% pullback from July’s multi-year high of near $32,000. The journey towards this impressive feat, though far from linear, has unfolded in six stages, ranging from rapid rallies to pullbacks.
Lasting flutters from this current period of decline may suggest a slightly deeper dip from July’s metrics before another rally can gather momentum. With this pattern, we could deduce a downward tailspin potentially diving to just below $25,000 before a resurgence takes flight.
Yet, it’s important not to overlook elements that cast a darker shadow over the recent downward slide. The last couple of pullbacks saw Bitcoin hover above its 200-Day Moving Average (DMA), adhering to the stability of the 2023 uptrend. Now, this current slump has encroached on these essential long-term support barriers.
Further ill omens can be found in the recent statistical slowdown of the rally’s pace across the June/July period, signaling an ebbing of buyer enthusiasm. A mere 2% rise above the preceding April highs reveals a tired market at the brink of the low $30,000s.
Simultaneously, on-chain metrics quiet the bullish orchestra to a mere trio from the previous ensemble of eight. These circumstances place Bitcoin dangerously close to plummeting beneath the $24,750 support mark. If the cryptocurrency doesn’t claw its way back from this precipice, it’s in danger of reaching the chilling $20,000 dwelling – where the “Realized Price” currently resides, averaging previous movement prices.
Casting a glimmer of hope over this gloomy outlook is Bitcoin’s overextension on the oversold side, indicated by the 14-Day Relative Strength Index. This may be a timely insurance policy staving off further descent and allowing Bitcoin to recuperate before the next tumble.