Bitcoin (BTC) is currently facing a potential retest of long-term support, according to data analysis. This comes after BTC’s price fell during the August monthly close.
BTC/USD has now dropped below the $26,000 mark as of September 1st. This reversal of gains from the previous week has raised concerns among market participants. Initially, there was optimism as Bitcoin managed to hold onto a key long-term trendline and maintain a price of $27,000.
However, the decision by the United States Securities and Exchange Commission (SEC) to delay several Bitcoin spot price exchange-traded fund (ETF) applications caused a shift in sentiment. In just two hourly candles, Bitcoin lost $1,000 in value.
Now, experts are worried that even the current levels may not provide sufficient support for the market. Ali, a popular trader, believes that based on on-chain data, Bitcoin lacks strong support below the $25,400 mark. If BTC were to break below this threshold, it could potentially correct down to $23,340.
Ali has provided a chart of the UTXO realized price distribution (URPD) metric from Glassnode, an on-chain analytics firm. This metric tracks the price at which the current set of transaction outputs was created, offering insights into possible support and resistance levels.
Interestingly, a breakdown to $23,000 would not be surprising to some traders and analysts, as it is already a target that they have been monitoring closely.
A further analysis from Material Indicators, using its proprietary trading tool called Trend Precognition, paints a similarly grim picture for BTC/USD on different timeframes (daily, weekly, and monthly). According to Material Indicators, for a chance of a rebound, $24,750 needs to hold as support. If the price drops and remains below $25,350, the bullish signal will be invalidated. However, if support holds above the lower low (LL) at $24,750, there is a good foundation for a rally and a retest of resistance levels.
Additional insights can be gained by monitoring the monthly candle open for a signal from the Trend Precognition algorithm. This will provide insight into whether there will be an extension of the downtrend or a potential monthly momentum shift to the upside.
On a related note, CoinGlass data revealed that August 31st saw the largest volume of BTC long liquidations since the 10% price dive earlier in the month. The total liquidations amounted to $41 million for BTC and $108 million across various cryptocurrencies. Despite this significant amount, it is still much lower than the daily tally observed two weeks prior.
It is important to note that this article does not provide investment advice or recommendations. Every investment decision carries risks, and readers should conduct their own research before making any investment choices.
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