Last week, Bitcoin’s volatility increased slightly as the cryptocurrency finally closed the week at $25,900.
Recent Bitcoin price movements were primarily influenced by developments related to spot ETFs (Exchange Traded Funds) and actions taken by the US Securities and Exchange Commission (SEC) against the cryptocurrency sector during the summer months.
To give you a quick recap: In June, when the SEC took legal action against Binance and Coinbase (NASDAQ: COIN), it pushed Bitcoin below the $25,000 mark. Nevertheless, a significant turnaround occurred when BlackRock (NYSE: BLK) filed for a spot ETF, quickly driving Bitcoin into the $31,000 range.
Bulss’s efforts to hold Bitcoin above $31,000 continued through mid-July, but failed due to macroeconomic events that reduced risk appetite in the market and a lack of specific catalysts to support a sector-wide rally.
Finally, Bitcoin, which started trading below $30,000 last month, lost ground with a sharp decline due to the sale of its Bitcoin holdings by Elon Musk’s SpaceX Company and a real estate crisis originating in China.
During this drop, fueled by panic selling, Bitcoin moved with low volatility trades, using the $26,000 level as a pivot point.
Last week, the market rejoiced at Grayscale’s victory in its SEC lawsuit, but the regulator’s decision to postpone ETF application reviews until October made the enthusiasm short-lived.
At the moment, Bitcoin is trending horizontally just below the $26,000 mark. On a weekly basis, it is evident that BTC is finding support above $25,500, which corresponds to the 382 Fib level based on the November 2022 low and June 2023 high.
The loss of the critical support at $28,000 sent a strong signal that downside risks have increased. The sharp drop in mid-August also caused the Bitcoin price to fall below the medium-term EMA on the weekly chart.
Therefore, it is crucial for Bitcoin to hold the $25,500 support to prevent further declines. If this support is broken, BTC could extend its downward momentum to around $21,700 (Fib.618).
Although Bitcoin confirmed the break of the 2023 uptrend with last month’s selloff, it would not be accurate to say that it is in a downtrend as long as it holds the $25,500 support.
Since April, when the bullish momentum slowed, Bitcoin’s price action has oscillated within a wide range of $25,000 to $31,000. Therefore, losing the .382 Fib level would technically confirm the start of a downtrend.
A Remarkable Potential Bullish Move
If Bitcoin manages to hold above this critical support in September, the $28,000 region will become important for potential bullish moves. A weekly close above this level would negate the formation of a downtrend and mark the first step towards recovery.
Furthermore, this move would imply crossing the midline of the price band, which could trigger further advances towards $31,000, depending on whether the cryptocurrency enters positive territory.
If Bitcoin attracts buyers above $31,000 in the last quarter of the year, it would signify a recovery from the 2023 uptrend, providing a positive outlook for the cryptocurrency as it enters 2024.
While the BTC price continues to hold above June support, the Stoch RSI indicator has pulled back to the November 2022 lows. However, it has yet to generate a reversal signal.
This suggests that if the resistance, closely monitored at $28,000, is broken on a weekly close, we could see the indicator signaling support for a move higher.
By Leonardo Pérez
