- Bitcoin is currently finding support above $25,500, which corresponds to the Fib 0.382 level
- It needs to stay above this critical support in September for the bulls to gain strength
- Fed decision and US CPIs set to decide Bitcoin's fate in September
Last week, Bitcoin's volatility increased slightly as the crypto ultimately closed the week at $25,900.
The recent movements in Bitcoin's price were mainly influenced by developments related to spot ETFs (Exchange-Traded Funds) and actions taken by the U.S. Securities and Exchange Commission (SEC) against the cryptocurrency sector during the summer months.
To give you a quick summary: In June, when the SEC took legal action against both Binance and Coinbase (NASDAQ:COIN), it pushed Bitcoin below the $25,000 mark. However, a significant change occurred when BlackRock (NYSE:BLK) applied for a spot ETF, quickly pushing Bitcoin up to the $31,000 range.
Bulss' efforts to keep Bitcoin above $31,000 continued until mid-July, but they failed due to macroeconomic developments that reduced risk appetite in the market and a lack of specific catalysts to support a sector-wide increase.
Finally, Bitcoin, which started trading below $30,000 last month, lost ground with a sharp decline due to Elon Musk's company SpaceX selling its Bitcoin holdings and a real estate crisis originating from China.
During this decline, which was driven by panic selling, Bitcoin moved with low-volatility transactions, using the $26,000 level as a pivot point.
Last week, the market was cheered by Grayscale's victory in its SEC lawsuit, but the regulator's decision to postpone ETF application reviews until October caused the excitement to be short-lived.
At the moment, Bitcoin is maintaining a horizontal trend just below the $26,000 mark. On a weekly basis, it's evident that BTC is finding support above $25,500, which corresponds to the Fib 0.382 level based on the low from November 2022 and the peak from June 2023.
The loss of the critical support at $28,000 sent a strong signal that bearish risks have increased. The sharp decline in mid-August also caused Bitcoin's price to dip below the mid-term Exponential Moving Averages (EMAs) on the weekly chart.
Therefore, it's crucial for Bitcoin to hold the $25,500 support to prevent further declines. If this support is breached, BTC could extend its downward momentum to around $21,700 (Fib 0.618).
Although Bitcoin confirmed the break of the 2023 uptrend with the selloff last month, it wouldn't be accurate to claim that it's in a downtrend as long as it maintains the $25,500 support.
Since April, when the bullish momentum slowed, Bitcoin's price action has oscillated within a broad range of $25,000 to $31,000. Thus, losing the Fib 0.382 level would technically confirm the start of a downtrend.
Should Bitcoin manage to stay above this critical support in September, the $28,000 region will become significant for potential upward moves. A weekly close above this level would negate the formation of a downtrend and mark the first step toward recovery.
Furthermore, this move would involve crossing the midline of the price band, potentially triggering 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 the recapture of the 2023 uptrend, providing a positive outlook for the cryptocurrency as it enters 2024.
While BTC's price continues to hold above the June support, the Stoch RSI indicator has retraced to the lows of November 2022. However, it hasn't yet generated a reversal signal.
This suggests that if the resistance, closely monitored at $28,000, is breached with a weekly close, we could see the indicator signaling support for an upward movement.
Fed Decision, US CPIs Key for Bitcoin's Next Direction
Among the developments that could impact Bitcoin's price, the upcoming Federal Reserve (Fed) interest rate decision this month stands out.
However, recent interest rate decisions and policy views from the US Federal Reserve have had a limited impact on the cryptocurrency sector in recent months.
This is because these views have been consistent for some time, and the current interest rate cycle has been priced in. The Fed will announce its interest rate decision on September 14, with expectations leaning towards no change in rates for September.
Nevertheless, the US inflation data scheduled for release on September 13 could directly affect the volatile markets.
In light of this data, the cryptocurrency markets may become more active in the second week of September.
In summary, the first half of September may provide an answer to the question of whether Bitcoin will continue its short-term sideways movement or strengthen the downtrend.
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Disclaimer: This article is for information purposes only; it is not intended to encourage the purchase of assets in any way, and does not constitute a solicitation, offer, recommendation, opinion, advice or investment recommendation. We remind you that all assets are considered from different angles and are extremely risky, so that the investment decision and the associated risk are specific to the investor.