BTC price performance in August left nothing to be desired as bears set camp in the market, prolonging a stubborn downtrend since early July. Down 11.5% in 30 days to $25,808, the largest crypto has barely formed two bullish candles since July.
Losing support at $30,000 marked a bearish turning point which was greatly underestimated by analysts and investors. In addition to putting an end to the bullish technical outlook that had propelled the price of Bitcoin to $32,000 in June, the breakdown confirmed a critical rising wedge pattern.
BTC Price Downtrend Far From Over
The persistent downtrend in July, August, and currently September is just but a continuation of the rising wedge breakout, with a 36.63% target to $18,940. BTC price has already completed approximately 10% of the drop with 26% likely to follow.
Based on the weekly chart, the 200-week Exponential Moving Average (EMA) (purple) at $25,586 holds as the most important support, which bulls must strive to defend at all costs. Bitcoin sits below the 50-week EMA (red) and the 100-week EMA (blue) – a sign that bears have the upper hand.
The Relative Strength Index (RSI) has upheld a negative outlook since April and might have to drop to the oversold region before BTC price begins a significant trend reversal. The RSI forming a negative divergence with the price should have served as a warning to many that Bitcoin was not poised for a bull run despite the move to $32,000.
Short positions in BTC would continue on a profitable path as bulls search for stronger support. Traders may want to book profits as they go to avoid sudden bear traps of short-term price swings, which apart from liquidating positions, are not sustainable. That said, consider levels at $24,000, $22,000, and $20,000 as potential exits for shorts or entries for short-term long positions.
Bitcoin Short-Term Holders Capitulate
Short-term holders in Bitcoin have been left with no choice but to capitulate. In other words, they are closing their positions while absorbing the losses, culminating in a 14 percentage points drop in the supply of BTC in profit – ARK Invest reported.
Despite the negative sentiment, this period could still mark the beginning of a bull run, as opined by analyst Ben Lilly. “Bitcoin’s about to take the driver’s seat again,” Lilly said via a written statement, citing Bitcoin Dominance action in 2018 and 2019.
“We trended down for a few months (first red arrow) before getting the massive reversal on April Fools’ Day (first green arrow),” Lilly added.
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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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