Currently, Bitcoin (BTC) is trading above $57K, a critical level that could lead to a potential recovery. If the bulls successfully maintain this position, BTC might surge towards the $68K resistance.
On the other hand, if the bears take charge and BTC breaches the $55K support, a drop to the $50K-$51K range is likely. Further weakness could push BTC down to $40K.
September has historically been a bearish month for Bitcoin, with only four positive years out of the last 13. Will this pattern repeat, or will the bulls manage to reverse the trend?
BTC’s Uncertain Bearish Prospects
Analysts are highlighting the looming uncertainty surrounding the Bitcoin bear market.
The TD sequential indicator on the 2-month Bitcoin chart is signaling a sell, indicating a potential decline. Should BTC dip below $51,000, it could slide towards $40,600—a scenario that the bulls hope to evade.
To avert this scenario, maintaining the $57K support level is crucial. CryptoCrypto advocates easing the leverage-heavy positions to prevent sudden and drastic price fluctuations.
In essence, a 10% reduction in open interest could contribute to price stability, potentially leading to either a bearish retreat or a bullish upswing. So, is a downturn imminent?
The Supremacy of the Bitcoin Bear Market
The Bitcoin bear market has shown its dominance at the beginning of September, confining the price within the $59K – $57K range.
Based on CryptoCrypto’s findings, on August 26th, when BTC tested the $64K threshold, the Open Interest (OI) was approximately $34.72 billion. Since then, both BTC and OI have plummeted significantly, indicating profit-taking by future traders.
However, re-entering a high OI area could heighten volatility. As traders approach breakeven levels, a mass exodus could impede momentum and drive BTC prices down.
Short positions have been surpassing longs for the past three days, with shorts currently holding a 52% majority in the market.
If the Bitcoin bear market gains traction and BTC probes the $56,572 zone, around $45 million worth of 100x leveraged positions could face liquidation, potentially pushing BTC closer to $51K.
Conversely, nearing $57,400 could lead to liquidation of approximately $67 million in short positions.
Overall, an environment of high OI with shorts dominating the derivatives space could favor the Bitcoin bear market. Therefore, safeguarding the $56K – $57K support band is pivotal for a potential breakthrough—what are the chances?
Bitcoin Institutions in the Face of Bearish Pressures
Recent trends indicate that institutions are offloading BTC. Since August 26th, crypto asset management firm Ceffu has deposited 3,063 BTC valued at $182 million into Binance, resulting in a notable 3% BTC price decline on September 3rd.
This trend suggests a lack of enthusiasm among major holders. If this pattern persists, it could trigger market unease.
To uphold the $57K support and aim for $68K, long-term holders must refrain from mass selling. Otherwise, with shorts prevailing, BTC could retreat to $51K and potentially dip beneath $40K.