BTC Price Falls: Is There a Potential Reversal on the Horizon?
Bitcoin has been plagued with low volatility after the widely celebrated rally to $30k on June 29. As usual, this has caused growing uncertainty among crypto enthusiasts in the past few weeks over Bitcoin’s subsequent decline to around $25k.
Admittedly, according to popular opinion and expectation, Bitcoin reaching $30k signaled a much bigger soar. Still, this present contrary move in price must have caused disappointment and some panic. However, this result isn’t too far-fetched considering a few reasons:
Cryptocurrencies’ legal status and regulation vary widely across different countries and regions. Some governments have imposed bans or restrictions on crypto transactions, while others have adopted a more favorable or neutral stance.
For example, on August 15, 2023, the Securities and Exchange Commission (SEC) of the United States announced that it would delay its decision on whether to approve ARK Invest’s Bitcoin exchange-traded fund (ETF) until 2024.
his decision was expected by many investors, who hoped that the Ark21Shares Bitcoin ETF would increase the liquidity and legitimacy of the crypto market. However, the delay caused disappointment and uncertainty among crypto enthusiasts, who feared that the SEC might reject the proposal or impose strict regulations.
Some analysts have suggested that the recent price movements of Bitcoin are influenced by large-scale “market manipulation” by some powerful entities or individuals who can move the market with large orders or trades.
For example, a mysterious “whale” (a term used to describe a person or entity that owns a large amount of Bitcoin) transferred $3.1 billion worth of Bitcoin from an unknown wallet to another unknown wallet in less than 3 months. This transaction sparked speculation and fear among some traders, who wondered if the whale was preparing to sell or buy a large amount of Bitcoin, which could affect the price significantly.
Recent Price Action Breakdown
While it can be seen that $31k was approached with notable velocity, that $31k level happened to be at an area of value, i.e., a resistance zone (red), and buying pressure died down. The uncertainty between buyers and sellers caused a range market lasting from June 23 to July 14. Note that this is a minor range pattern formed by the false breakout from the major range pattern, which started in mid-March, as per a previous analysis.
Price eventually broke out and closed below the support level of the range with a bearish engulfing candle on July 24. As a sequel to the breakout, Bitcoin went into a steep decline to a level near the June support level of $24928.
The decline is currently at a halt as the price has been created and is sitting on a minor support level at $25807.
There are still ongoing debates among analysts on whether the BTC price falls is merely a correction or if it is an attempt at reversal. The minor support level created in the past few days may act as an area of value for buyers to observe and apply more pressure.
However, if Bitcoin’s price breaks out from the major support area, it would be considered a character change. It could signal a potential reversal since that support area coincidentally sits at the recent higher low of the former uptrend. More studies should be taken to understand the future direction of the market.
Featured image: Getty Images
Dominic Jubemi is primarily into legal practice. However, he has taken interest in building and grooming fundamental skills in FX and Crypto trading, audio engineering and in the nearest future, fiction writing.
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