The Significance of the $55,355 Support Level for Bitcoin Stability in October
Despite going against the usual market trends, Bitcoin managed to show a positive performance in September. However, in the last couple of days, there has been a noticeable drop in its value. At the time of writing, Bitcoin was being traded at $61,407, indicating a 4.31% decline on a weekly basis.
Prior to this decline, BTC had been steadily rising, showing a 5.99% increase on a monthly scale. Nevertheless, after reaching a peak of $66,508, the price saw a dip to as low as $60,164.
This recent shift in price has sparked various discussions within the cryptocurrency community. Notably, well-known crypto analyst Man of Bitcoin has suggested a potential decrease by pointing out an ABC structure on Elliot’s wave -B.
Interpreting the Analysis
The analyst pointed out that Bitcoin has broken a minor support level, indicating a possibility of further decline.
As per this analysis, the market sentiment is pessimistic, leading to two potential scenarios.
In the first scenario, BTC might undergo an ABC correction where Wave-A has commenced, resulting in declining prices. The crucial aspect here is that Wave-B might fail to drive the price above previous highs. Therefore, in this case, Bitcoin would need to maintain its support above $55,355.
Conversely, in the second scenario, Bitcoin could breach the $55,355 support threshold, initiating a five-wave pattern on the downside, suggesting a more significant decline.
Although Man of Bitcoin’s analysis hints at a potential downside post the recent price movement, it is vital to consider other fundamental indicators.
Firstly, Bitcoin’s Price DAA divergence has consistently been negative in the past week, indicating that the ongoing rally in BTC’s price lacks fundamental support due to reduced on-chain activities.
This market situation suggests that the price surge is unsustainable, reflecting a waning interest and confidence among investors.
Moreover, MVRV’s difference between long and short positions has decreased from 4.5% to 3.7% in the previous week. This decline hints that long-term holders may be reducing their positions, while short-term holders could be selling off to prevent losses.
Furthermore, Bitcoin’s large holders’ netflow has entered negative territory since September 25th, implying that major holders are not initiating new positions but closing existing ones.
A decrease in funds flowing from large holders signifies a negative sentiment in the market, with high outflows suggesting profit-taking or risk aversion.
Essentially, Bitcoin is currently facing a bearish sentiment, indicating an attempt by bears to dominate the market. If these circumstances persist, BTC may fall to $59,899. However, a reversal could see Bitcoin rise back to the $62,675 levels.