Will Bitcoin experience a new drop or will it start gaining?

Bitcoin, the world’s most popular cryptocurrency, has been navigating a challenging time, with prices that continue stagnating. Investors have continued to buy Bitcoin on exchanges such as Binance, convinced that digital gold remains resilient and able to maintain its value. The continuous presence of cryptocurrencies remains essential during times of economic volatility and higher inflation rates. People want the certainty that there’s something they can rely on in case fiat currency starts struggling with devaluation.

Rise or fall

Recent data shows that BTC is still 60% down compared to its all-time high in November 2021. These figures have created apprehension among traders, who are unsure of what they can expect over the following months. Bitcoin has always been changeable, but it seems now that it’s almost impossible to figure out its direction.

Bitcoin remains under the yoke of a bullish reversal. After hitting a new low in November 2022, when it went below $17,000, BTC started gaining, taking back approximately 70% of its previous value. It was an astronomic climb, and BTC moved against the woes of macroeconomics and hike rates and was primarily fueled by optimism regarding the possibility of the exchange-traded fund approval.

However, investors didn’t manage to hold the momentum to hold the price in the $30k area and managed to surpass these levels. Now, many expect that the price will start picking up speed shortly, owing to the approach of the next Bitcoin halving.

Fibonacci fractal 

Looking at it from a technical standpoint, Bitcoin has been stabilized around the 0.236 Fib line of the Fibonacci retracement graph. This tool is used within the Bitcoin ecosystem, similar to how it is in stocks, and many investors have started looking to it for guidance. The graph is drawn from the $69,000 swing high, representing the top of the market, to the swing low, the market bottom of $15,900.

There’s a historical precedent for the current price stagnation witnessed during the Bitcoin price correction in 2018. Back then, the Bitcoin/dollar pair managed to stabilize somewhere around the 0.236 Fib line, or $6,790, for several months. Afterward, it dropped to the $3,000 level in December. This also coincided with the multiyear ascending support. Bitcoin is, as of September, around halfway through that same tendency.

The price has been flatlining, and a breakdown could mean that the values could drop as low as $21,500. That means that Bitcoin could go down by almost 20% compared to its current levels.

Continuous stagnation

Over the course of September 2023, Bitcoin experienced something akin to a decline, as neither the bulls nor the bears were able to support any cohesive trend. This isn’t surprising, as the first fall month is typically associated with plummeting prices. Large-volume investors have elected to remain on the sidelines, so the area around $26k became increasingly popular for BTC as the year progressed.

Currently, the spot price is surrounded by trendlines, and analysts believe that this has contributed to inhibiting volatility. The trend began in August when BTC suddenly lost around 10% of its price in one fell swoop. However, it’s also noteworthy to remember that the price cycles have acted differently over the last four years than in the more distant past.

In March 2020, Bitcoin was below the 200-week MA but still maintained its support. BTC managed to form an accumulation zone. It recently got into new resistance, suggesting that the price could also remain beneath the MA during the upcoming weeks.

Dollar strength 

The relationship between cryptocurrencies and traditional finance has historically been a challenging one. The DXY, which measures the strength of the greenback against several other currencies, is currently at the highest level it has recorded since November 2022. That’s no small feat, especially given that the US Dollar Index has been negatively correlated with Bitcoin throughout the current year.

The Federal Reserve’s interest rate decision on September 20th has only accelerated the decision, so the DXY is currently in its 11th consecutive green candle. Bitcoin’s prospects could become even more limited if the dollar continues growing.

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Old Bitcoin 

The on-chain metrics paint a convoluted portrait of Bitcoin’s current and future movements. The CDD metric, which aims to measure long-term actions, had a momentary spike on September 19th, showing that some hodlers have moved their coins. This could indicate repositioning and profit-taking, but investors should be particularly mindful of these movements since they have typically preceded value declines.

The Bitcoin reserves have continued to decline across exchanges, pointing towards a gradual but consistent and considerably-sized movement towards hodling to the detriment of speculative activities. This is no surprise, especially since the latest data shows that price fluctuations have caused short-term holders to incur losses of nearly 100% while long-term holders have emerged largely unscathed.

Expert opinions 

Analysts are divided on how the Bitcoin price could change in the future. While some anticipate a considerable decline before the next rally, others are more optimistic. Some predictions include the possibility of Bitcoin climbing to $30,000 in October. One of the critical indicators for this movement is the thin ask liquidity around $27k, which could signify a breakout.

Nonetheless, the beaker estimations go even below those supported by the Fib line and show that Bitcoin might slump as far down as $18,000 as part of the pre-halving fractal action. The next one hundred days are crucial for the dollar-cost-averaging levels, and if Bitcoin is to retract, it will most likely be during this timeframe.

Mining costs 

Miners can face some issues as well, and the consequences in the aftermath of the 2024 halving could be severe. The competition is becoming more intense as hash rates reach record-high levels. This shows unprecedented conditions for the miners. So far, Ordinal inscriptions have managed to help by turning empty blockspace into returns, but as the demand increases, the miners will also be affected.

The income received from these fees has been between 1% and 4%, which is low compared to historical standards but quite elevated when considering the previous bear markers.

Things haven’t been easy for Bitcoin, but investors are convinced that things will ultimately change. After all, BTC experienced slowdowns before but always managed to return to its former strength.