Bitcoin (BTC) continued to defy the market trend on August 22nd, with its price hovering around the $26,000 mark throughout the day. The sideways movement of BTC/USD for the third consecutive day has left investors eager for a breakout in either direction.
Despite being heavily oversold, as indicated by the relative strength index (RSI), Bitcoin showed no signs of a recovery bounce. This lack of upward movement has led to frustration among market participants, with some referring to the intraday movements as the “death chop.” Traders are eagerly waiting for a decisive move to end this choppy period.
Analyzing the liquidity on the BTC/USD order book on Binance, it was noted that there is a lack of liquidity, which increases the potential for a sharp move in either direction. Material Indicators, a monitoring resource, explained that the market is waiting to see if more buying or selling pressure will be attracted to the range. So far, there has been a small increase in buying pressure near $20,000, but no significant liquidity has been stacked into the range to defend the price from a lower low.
The implications of this sideways movement could be serious for bullish investors, as it could risk breaking the $20,000 support level. Material Indicators stated that printing a lower low in this time frame would have macro implications and could push BTC down to sub $20,000 levels.
Despite the current situation, there is still hope for a recovery in Bitcoin’s overall uptrend. The heavily oversold signals from the RSI have historically resulted in V-shape recoveries, where Bitcoin quickly regains its value and finds equilibrium at a higher level. Michaël van de Poppe, CEO of trading firm Eight, believes that Bitcoin could stage a comeback and focus on the $26,500 level or even higher.
Comparing the current price action to September 2020, a period before the start of the previous bull market, some traders see similarities in the absorption and slow grind higher. This comparison suggests that Bitcoin could experience a similar price trajectory.
It is important to note that this article does not provide investment advice or recommendations. Investors should conduct their own research and analysis before making any investment decisions.