Bitcoin is once again navigating turbulent waters, facing a downward trajectory as it struggles to regain its former highs. Just yesterday attempts to breach the $60,000 mark faltered, with the cryptocurrency sliding to a monthly low beneath $56,000. The downturn didn’t stop there; it mirrored similar declines in major altcoins like ETH, which dipped to $2,400, and BNB, now sitting at $510.
The saga began last Monday when Bitcoin aimed to topple the $65,000 threshold but found no support, initiating a week of fluctuating prices. By Wednesday, it had dipped to $58,000, although a brief recovery saw it almost hitting $61,000 the following day. This recovery was short-lived, as the weekend saw prices stagnate below $60,000.
The new week brought minor relief, with Bitcoin clawing back to $57,000 thanks to some bullish activity. However, this momentum was not enough to sustain a rally. By Tuesday morning, Bitcoin briefly touched $59,600 before shedding nearly $1,000 in a swift downturn, eventually plummeting to $55,600 on Bitstamp, resulting in widespread liquidations.
Currently, Bitcoin’s market cap has fallen to $1.120 trillion, a clear sign of its reduced dominance, which now hovers below 54% according to CoinMarketCap data. This marks a significant shift from previous patterns where Bitcoin demonstrated stronger resilience.
Bitcoin tests Key Support of $56,000 amid a bearish downturn
The daily chart is looking more bearish as seen in the Moving Average Convergence Divergence (MACD) indicator. The MACD line is below the signal line and still going down, selling pressure has not subsided. The histogram is also printing deeper and deeper negative values, bearish momentum is getting stronger.
Also, the price is below the 20-day Exponential Moving Average (EMA) which is acting as a dynamic resistance. This EMA setup means the path of least resistance is down if the resistance holds.
The Relative Strength Index (RSI) which measures the velocity and magnitude of price movements is showing Bitcoin is already near oversold with a reading above 40. This means there is still downward pressure but there is potential for reversal or stabilization if the RSI gets closer to the oversold threshold at 30.
Given the current setup, Bitcoin has a big resistance at $59,500 where the 20-day EMA is. For the bulls to take control, a sustained break above this level is needed. But if Bitcoin fails to break this resistance, it could test the support levels near $55,600.
BTC Price Movements and Considerations
Adding to Bitcoin’s problems is the Stochastic Relative Strength Index (RSI) on the 2-month chart is showing a bullish to bearish crossover. Historically this has been a precursor to a big correction. In fact, when this happened last year when Bitcoin was at $60,000 it fell to $16,000 before rallying to $73,700 in March.
Crypto analyst Ali Martinez points this out, Bitcoin could drop 75% from current levels and go down to $14,200. That would be a big blow to market confidence especially in a year of Bitcoin halving which is a usual catalyst for price increase.
September has been a tough month for Bitcoin, it has lost 7 out of the last 10 years. The losses have varied from 5% to 18%. But it’s worth noting that Bitcoin always recovers in October, the gains have been between 20% to 52% so there’s a possibility of a bounce.
As Bitcoin faces these big market headwinds, we’ll see how it handles the upcoming tests. With history pointing to a bounce, October could be the month to turn things around. But for now, Bitcoin holders should prepare for a bumpy September.
