BTC price dip gone by September? 5 things to know in Bitcoin this week
2024.08.26 05:12
Bitcoin (BTC) heads into the August monthly close with a welcome recovery as BTC price action targets $65,000.
The largest cryptocurrency has delivered a remarkable show of strength over the past week, and traders hope the good times will continue.
A sideways weekend aside, BTC/USD is cementing its gains and is now up an impressive 40% from the month’s $45,500 lows.
The coming monthly candle close should thus provide an interesting trading environment as anticipation grows over a breakout from a consolidation phase which has lasted nearly half a year.
Can Bitcoin finally retackle all-time highs?
Month-to-date, BTC/USD is now almost back at its starting position, but plenty of volatility catalysts await.
Macroeconomic data will come thick and fast toward the end of the week, presenting a fresh test of nerve for the increasingly risk-averse Bitcoin short-term holder cohort.
Fundamentals, meanwhile, look good, with mining difficulty due a modest uptick in the coming days.
Sentiment is back in neutral territory, with the average crypto investor leaving their cold feet behind with impressive speed.
Cointelegraph takes a closer look at the state of play on Bitcoin ahead of a key week for the cryptocurrency which just a fortnight ago was battling calls for a fresh bear market.
Bitcoin monthly close in the spotlight
Bitcoin is firmly bouncing back after a harrowing start to August, but traders’ attention is now on the monthly close.
BTC/USD 1-hour chart. Source: TradingView
Such events constitute volatility triggers on their own, and while up 40% versus the month’s lows, BTC price action has much to contend with.
“Bitcoin Fought its way back to an almost break even August,” popular trader Daan Crypto Trades summarized on X alongside data from monitoring resource CoinGlass.
BTC/USD monthly returns (screenshot). Source: CoinGlass
Order book liquidity insights nonetheless show formidable resistance lingering overhead, with spot BTC price separated from all-time highs by a wall of asks.
BTC liquidation heatmap (screenshot). Source: CoinGlass
“Now let’s see if there’s also fuel to actually push higher for a change,” Daan Crypto Trades continued.
A further post acknowledged the unprecedented length of BTC price consolidation following its last all-time high in mid-March.
“Bitcoin It has been close to 6 months of ‘Consolidation’ at the previous cycle high,” he told followers.
“This is by far the longest time it took to break a previous all time high. It was also the quickest price has made a new all time high in a cycle (before the halving). It all balances out.”
BTC/USD 2-week chart. Source: Daan Crypto Trades/X
Fellow trader Crypto Tony joined those calling for a solid reclaim of support to sustain further recovery moves.
Source: Crypto Tony/X
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD at the time of writing at around $63,700, having stayed flat throughout the weekend.
PCE week arrives mid countdown to Fed rate cut
The Fed’s “preferred” inflation metric forms one of the week’s macroeconomic data highlights as markets become more confident over financial policy easing.
The July print of the Personal Consumption Expenditures (PCE) index is due on Aug. 30, a day after US Q2 GDP data.
Both will follow a key earnings report from NVidia — an event which has become a yardstick for tech industry health this year.
Trading resource The Kobeissi Letter thus told X followers to “buckle up for a wild week ahead.”
“Nvidia earnings and PCE inflation in the same week make for great trading conditions,” it wrote.
Fed target rate probabilities. Source: CME Group
PCE comes at a time when markets have baked in 100% odds of an interest rate cut in mid-September while also giving increasing credence to this cut being more than the minimum 0.25%.
The latest data from CME Group’s FedWatch Tool puts the odds of a 25-basis-point and 50-basis-point cut at 61.5% and 38.5%, respectively.
“Rate cuts are confirmed for Sep but there was no indication on how much, so August Payrolls will be critical,” trading firm QCP Capital wrote in an update to Telegram channel subscribers over the weekend.
“A 25bp cut is likely to be bullish, while a 50bp cut could indicate the Fed is taking acute action to prevent the economy from falling flat.”
Mining difficulty set to resume uptrend
Bitcoin network fundamentals show signs of an about-turn after testing conditions over the past month.
The latest estimates from monitoring resources BTC.com and MiningPoolStats show the mining sector forging a path higher despite reports of a profitability squeeze.
Mining difficulty, which dropped by 4.2% at its last automated readjustment, is set to recover by 2.8% this week.
This will leave the metric inches from a new all-time high, canceling out the effects of the early-August BTC price slump below $50,000.
Bitcoin network fundamentals overview (screenshot). Source: BTC.com
At the same time, raw hashrate readings suggest an uptrend still firmly in place for the processing power dedicated to mining, with a new all-time high spike recorded on Aug. 23. This totaled 774 exahashes per second (EH/s), with known pools contributing 682 EH/s.
Bitcoin hashrate raw data (screenshot). Source: MiningPoolStats
Earlier, Cointelegraph reported that despite miner sales tailing off in recent weeks, their overall impact on BTC price action has become dwarfed by institutional investment forces.
Short-term BTC holders distribute $10B in a week
Bitcoin’s short-term holders (STHs) have distributed coins to the market over the past week as prices recover.
Data from onchain analytics platform CryptoQuant shows that the week-on-week net position change for the STH cohort was more than $10 billion lower as of Aug. 25.
“This indicates an increase in selling by STH,” contributor Amr Taha wrote in one of the platform’s Quicktake blog posts, referencing a chart by fellow analyst Axel Adler Jr.
Bitcoin STH net position change (screenshot). Source: CryptoQuant
STH entities are those hodling a given amount of BTC for 155 days or less, and correspond to the more speculative end of the Bitcoin investor spectrum.
Recent BTC price volatility hit the cohort hard, with mass selling at a loss recorded into the six-month lows on BTC/USD.
Now, the STH aggregate cost basis is in focus as a potential line of support should a new price dip begin.
The combined STH cost basis currently stands at $63,600, per data uploaded to X by investment firm MS2 Capital.
Among the speculators, those hodling for up to a month have a lower cost basis of between $60,000 and $62,000.
BTC/USD 1-day chart. Source: MS2 Capital/X
Crypto launches higher from brink of “extreme fear”
Perhaps unsurprisingly, last week’s BTC price recovery had an instant effect on crypto market sentiment.
Related: MATIC, SUI, RENDER and TAO could soar if Bitcoin holds $64K
This is reflected in the Crypto Fear & Greed Index, which has more than doubled its readings in a matter of days—from 26 100 on Aug. 21 to 55 100 at the time of writing.
The sentiment shift to which that change corresponds suggests that the average crypto investor’s mindset has gone from the verge of “extreme fear” to knocking on “greed.”
Crypto Fear & Greed Index (screenshot). Source: Alternative.me
The recovery is echoed by a CryptoQuant metric dedicated to Bitcoin futures market sentiment. This narrowly avoided a trip to “extreme fear” in August.
BTC futures sentiment index (screenshot). Source: CryptoQuant
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
