Bitcoin (BTC) Launches at a Crossroads With BTC Price Action Throughout the First Week of September – Can $26,000 Return?
After a quiet weekend, the dust on last week’s volatility seems to have settled as the crypto market returns to “business as usual”.
Bitcoin finds itself trapped in familiar territory, but with no trend in sight, traders and analysts remain undecided about its next move.
There is certainly no shortage of negative BTC price predictions – $25,000, $24,750 and even $23,000 have all become popular targets in recent weeks.
On the other hand, it is believed that it is a more difficult task for the bulls to regain the market momentum.
With network fundamentals consolidating their own recent gains and macro markets calming down, the question of whether September 2023 will be a classic month of single-digit losses for BTC/USD is now a hot topic of discussion.
Cointelegraph takes a look at the main factors influencing BTC price action in the coming days.
Weekend bitcoin price boosts BTC shorts
Bitcoin offered few surprises in weekend trading – a status quo that could continue as United States equity markets open on Sept. 5.
BTC/USD 1-hour chart. Source: TradingView
Data from Cointelegraph Markets Pro and TradingView shows that for most of the past two days, BTC/USD acted in a tight range of $200 – but minor upside and downside movements belied the presence of speculative exchange players. Have given.
These were spotted by popular trader Skew, who uploaded order book data showing the failed shorts behind bitcoin’s brief trips above $26,000.
Positions still getting liquidated on Sunday’s $200 price move
This little pop shorts was going to be blown up or shut down pic.twitter.com/7ih2KpjEEq
– Skew Δ (@52kskew) 3 September 2023
“Just had someone figure out where the stops were and the market bought a few million on the spot and then dumped it after forcing some shorts,” Extra X (formerly Twitter) added in part of the comment.
Further BTC spot market analysis questions whether the weekly close, which came in around $25,970, will turn out to be a scheme to give the bulls a false sense of security.
– Skew Δ (@52kskew) 3 September 2023
As Cointelegraph reported, $25,900 was already on the radar for Skew as the weekly candle close was the level to maintain.
However, for fellow trader and analyst Rect Capital, anything much below $26,000 was cause for concern on the longer time frame.
Failure to reclaim that level, he warned over the weekend, would mean risking a double top formation for 2023, which would see BTC price range in the area around $31,000 and decline for a long time to come.
“A BTC weekly candle close below ~$26,000 (green) would likely confirm a double top to kickstart the breakdown process,” he said. commented On the chart showing the setup.
BTC/USD annotated chart. Source: Rect Capital/X
Fed speakers headline macro week
Meanwhile a cool macro week is a potential source of light relief for risk asset traders.
The coming four-day week for the US carries little in terms of key macroeconomic data, with the Federal Reserve in focus instead.
Ahead of the month’s tough interest rates decision on Sept. 19, various senior Fed officials will offer commentary on the state of the economy this week. These include Atlanta Fed President Raphael Bostic and New York Fed President John Williams.
“Short week, but it’s all about the Fed,” financial commentary resource The Kobeissi Letter Abbreviation On X with the main diary dates of the coming days.
It added that Fed policy was “still unclear” ahead of the rates decision.
Bitcoin has become significantly less sensitive to Fed comments over the summer, with even Fed Chairman Jerome Powell’s comments failing to significantly affect BTC price action.
Still, the words used by the officials could reverse market expectations of what will happen with the Fed’s inflation battle.
At the time of writing, according to data from CME Group’s Fedwatch tool, the market was highly expecting – with 93% certainty – that rates would remain the same in September.
Fed target rate probability chart. Source: CME Group
Falling from all-time highs is causing hardship
After reaching new all-time highs two weeks ago, bitcoin mining difficulty is on the decline.
In a slight consolidation, the difficulty is expected to drop around 2.4% in its upcoming automatic readjustment on September 5th.
This is nothing unusual by historical standards, especially in light of the 6.5% increase seen in mid-August – an increase that came despite BTC price action moving in the opposite direction.
Overview of bitcoin network fundamentals (screenshot). Source: BTC.com
Analyzing the possible reason, James Stratton, research and data analyst at Crypto Insights firm CryptoSlate, flagged a decrease in BTC reserves of bitcoin miners.
“This coincides with a decrease of around 4k BTC in miner balances, mainly coming from F2Pool, which halved its BTC balance,” part of the Weekend X comment Reading,
Stratton added that any lull in BTC price performance could result in additional miner stress, further fueling the F2pool trend.
He warned, “If bitcoin experiences another drop we could potentially see another miner capitulation.”
Responding, IT Tech, a contributor to on-chain analytics platform CryptoQuant, referenced a correlation between the “slight” BTC price drop and miners sending BTC to exchanges.
“Certainly, this action added to the selling pressure, which eventually led them to sell off in the market,” an excerpt from recent comments. where did it go,
The IT tech described the BTC sale as modest in size but “at the worst of times”.
Idle BTC supply sets new record
Behind the scenes, the supply of bitcoin is increasingly becoming the property of long-term holders.
The latest data from on-chain analytics firm Glassnode reveals several new records related to BTC locked in long-term storage.
The percentage of the currently mined supply that is now inactive three years or more Now at 40.538% – it’s all time high.
Equivalent measurement for stablecoins in wallet at least five years Now is 29.637% – likewise a new record.
The BTC supply was last active five years ago or more ago. Source: glassnode/x
The reduction in supply is a welcome sight for bitcoin bulls, who conclude that any future demand for BTC will result in buyers competing for a small amount of supply.
In a recent analysis, Stratton also noted that bitcoin speculators, commonly referred to as short-term holders, had already distributed BTC in the market.
“Once again, bitcoin short-term holders have handed over nearly 20k BTC sent to exchanges at a loss,” he said. wrote at the end of the week.
“The fourth biggest amount this year. This will continue to widen the record gap between long holder and short holder supply.
Loss of Bitcoin transfer volume from short-term holders on the annotated chart. Source: James Stratton / X
With Glassnode data showing the amount of BTC sent by short-term holders to loss-making exchanges.
interest turns the clock back to 2020
Bitcoin is hardly a topic of mainstream conversation for the average non-crypto consumer this year, and Google Trends data proves it.
Related: Bitcoin Metric Predicts $23K BTC Price Level With ‘100% Long Hit Rate’
Generalized search interest is now back to levels that were seen in late 2020 before BTC/USD surged past its 2017 all-time high of $20,000.
Search activity is heavily correlated to BTC price action, and it appears that the lack of notable upside events throughout Q2 has contributed to the flat mainstream attention.
Google search data (screenshot) for “bitcoin”. Source: Google Trends
Meanwhile, within crypto, the average investor is feeling the fear.
According to the sentiment gauge, the Crypto Fear and Greed Index, “fear” is what is currently characterizing the overall market mood.
At 40/100, the index is in familiar territory from mid-August, when bitcoin fell 10%.
Crypto Fear and Greed Index (screenshot). Source: alternative.me
This article does not constitute investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making decisions.