BTC Price Continues to Decline in August
In August, the price of BTC experienced a significant decline, with bears dominating the market. Over the course of 30 days, BTC lost 11.5% of its value, dropping to $25,808. Since July, the largest cryptocurrency has only seen two bullish candles, indicating a strong bearish trend.
An important turning point occurred when BTC lost support at $30,000, which analysts and investors underestimated. This breakdown not only put an end to the previous bullish outlook that drove the price of Bitcoin to $32,000 in June, but also confirmed the presence of a critical rising wedge pattern.
BTC Price Downtrend Continues
The ongoing downtrend in July, August, and September is a continuation of the breakout from the rising wedge pattern. The price of BTC is expected to drop further by 36.63%, reaching $18,940. Currently, approximately 10% of the drop has been completed, with another 26% likely to follow.
On the weekly chart, the 200-week Exponential Moving Average (EMA) at $25,586 is a crucial support level that bulls must defend. BTC is currently below the 50-week EMA and the 100-week EMA, indicating that bears have the upper hand.
The Relative Strength Index (RSI) has been in a negative state since April and may need to reach oversold levels before the price of BTC begins a significant trend reversal. The negative divergence between the RSI and the price should have served as a warning that BTC was not ready for a bull run, despite reaching $32,000.
Considerations for Traders
Short positions in BTC are likely to remain profitable as bulls search for stronger support. Traders should consider booking profits along the way to avoid sudden bear traps caused by short-term price swings, which are not sustainable in the long run. Potential exit levels for shorts or entry points for short-term long positions include $24,000, $22,000, and $20,000.
Bitcoin Short-Term Holders Face Losses
Short-term holders of Bitcoin have been forced to close their positions and absorb losses. This has resulted in a 14% decrease in the supply of BTC in profit, according to ARK Invest. Despite the negative sentiment, some analysts, like Ben Lilly, believe that this period could be the beginning of a bull run. Lilly points to Bitcoin Dominance action in 2018 and 2019 as a potential indicator of a future reversal.
“We trended down for a few months before getting a massive reversal,” Lilly said.
Hot Take:
While the current downtrend in BTC may be discouraging, it’s important to remember that market conditions can change quickly. Keep a close eye on key support levels and indicators, and consider different trading strategies to navigate the volatility. Don’t let short-term losses deter you from the long-term potential of cryptocurrencies like Bitcoin.
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