Bitcoin Takes a Tumble, Slips 12% Over the Week: Will $57,000 Hold as Support
Bitcoin price is on a decline since last Monday and could be facing more downside if it doesn't hold above $57,000.
Key Takeaways
- Bitcoin lost 12% value from Aug. 26 to Sept. 1.
- Exchange reserves declined, signaling potential on-chain accumulation.
- A further drop to $51,700 is likely before the correction ends.
In a rollercoaster week for the reigning crypto king, Bitcoin’s price has plummeted from a lofty perch of nearly $65,000 in August to a trough of $57,174 on Sept. 1, erasing 12% of its value in just seven days.
Yet, in a sudden about-face, Bitcoin staged a spirited rebound on Sunday, surging above $58,600 and continuing its upward trajectory, offering a glimmer of hope to investors seeking a bullish turnaround.
BTC Fundamentals
As the price of Bitcoin careened lower, a corresponding shift in exchange reserves became apparent.
The number of Bitcoins held in exchange reserves mirrored the price action, dwindling from a high of 2,677,614 on Aug. 26 to a low of 2,616,964 on Aug. 29.
While the metric has since stabilized, the initial decline is a telling indicator of the market’s sentiment.
Typically, a decrease in exchange reserves is a bullish sign, as it implies that investors are accumulating Bitcoin on-chain rather than leaving it idle on exchanges.
However, this time around, the narrative is more nuanced. A deeper dive into the derivatives market reveals a more complex story.
Looking at the CoinGlass data , we can see a spike in long liquidations occurred on Aug. 27, with a total of $85,81 million being liquidated, compared to only $9,37 million in shorts.
This was the catalyst for the following downtrend and was the highest spike since Aug. 5.
BTC Bullish Scenario Invalidated
Since Aug. 5, Bitcoin’s price has been on a steady ascent, culminating in a high of $65,000 on Aug. 25. However, this upward trajectory was lacking a key confirmation: a five-wave pattern, which would have validated its impulsiveness and signaled the beginning of a new uptrend.
Instead, the price failed to sustain its momentum, plummeting below the $62,000 level, a crucial zone that marks the first high and presumed first sub-wave of a lower degree count. This decline effectively invalidated the possibility of an uptrend emerging from Aug. 5, according to the rules of Elliott Wave Theory.
In the broader context, Bitcoin has been navigating a descending channel since its mid-March all-time high of $73,770. This channel can be seen as a corrective phase, suggesting that the cryptocurrency may have one more leg down before completing its WXYXZ correction.
The crucial question now is whether Bitcoin can hold above its local support of $57,000.
If it does, there is still a chance BTC could break out above the descending resistance. But more likely, the price will face a lower low to $51,700 before this correction ends.
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