Key Points
- Bitcoin’s price recovery is stalling, potentially leading to a 25% drop in the coming weeks.
- The coin’s recent loss of key support at $60,000 and low open interest are contributing factors.
Bitcoin’s recent revival in price is losing momentum, raising concerns of a significant downturn in the near future. The coin’s value increased by 27% from its lowest point on August 5, but encountered robust resistance at the $62,000 mark.
On August 13, Bitcoin was trading at $59,000, having lost its key support at $60,000. CoinGlass data reveals that the 24-hour volume of Bitcoin in the spot market has steadied at $34 billion. However, the futures market’s open interest has been stagnant recently, totaling $28 billion, a decrease from last month’s high of more than $37 billion.
Factors at Play
One plausible explanation for the low open interest is that numerous Bitcoin investors experienced significant liquidations when the coin’s value plummeted to $49,000 before rebounding swiftly to $62,000. There are also uncertainties surrounding the forthcoming U.S. presidential election. The majority of polls suggest a tight race between the candidates, with Polymarket odds leaning towards Harris in key states such as Michigan and Pennsylvania.
Donald Trump, a Bitcoin supporter, has assured that his administration has no plans to sell the vast amount of coins it possesses. He has also declared that he would dismiss Gary Gensler, the chair of the Securities and Exchange Commission, who has concentrated on lawsuits during his term.
Technical Risks
Technically, Bitcoin faces significant risks. It has already formed the dreaded death cross pattern as the 50-day and 200-day Simple Moving Averages have intersected. Moreover, the MACD indicator’s two lines have dipped below the neutral point.
Simultaneously, Bitcoin has established a series of lower lows and lower highs, indicating a downward trend. Therefore, a fall below this month’s low of $49,000 will signify that bears have taken control and the falling broadening wedge pattern has been invalidated. This could trigger a further drop to the 50% Fibonacci Retracement point at $44,900, which is 25% below the level on August 13.
