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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