Bitcoin Price Tumbles: Analyzing Key Factors That Drove Latest Market Dip

Bitcoin Price Tumbles: Analyzing Key Factors That Drove Latest Market Dip

Bitcoin Market Experiences A Slight Dip

There has been a modest regression in Bitcoin's price, recording a 1.75% drop on Sept. 8, reversing almost all gains that came in prior to this. This has brought the price near to $25,850.

Price Uncertainty Plagues Bitcoin

September has seen a bit of a seesaw battle in the price of Bitcoin (BTC). The price has jumped between minor increases and decreases due to weakening liquidity in the market. The indecisiveness amongst traders chiefly stems from delays in a spot Bitcoin exchange-traded fund, and concerns over the Federal Reserve's decision concerning interest rates this month, an issue highlighted by ARK Invest.

Consistently, Bitcoin's price has traded within a tiny bandwidth, marked by a resistance level of $26,450 and a support level of $25,550, leading to a strategy of buying at support and selling at resistance amongst traders.

A Rising BTC Reserves Factor in the Price Decline

Also, a slight rise in exchanges’ BTC balance has presumably contributed to the dip in price. There has been an increase in Bitcoin reserves from over 2.03 million to 2.05 million BTC throughout September. The more the BTC on exchanges, the greater the potential pressure on the market.

Long Liquidations and Market Pressure

The length of the Sept. 8 Bitcoin dip sparked a rash of long liquidations in the derivative market. It is worth noting that the drop in spot BTC price led to $7.78 million of long liquidation, resulting in traders selling off their Bitcoin collateral to recoup borrowed money, thereby escalating the selling pressure in the market.

Forecasting the Future of Bitcoin Prices

In a technical sense, the Sept. 8 downturn has nudged the Bitcoin price below its 50-period, four-hour exponential moving average (50-4H EMA). This increases the likelihood of BTC continuing its downward trend over the next few days, perhaps to the $25,550 mark. This benchmark is aligned with a support confluence that includes a horizontal level and a descending trendline.

On the other hand, reclaiming the 50-4H EMA as a support might position BTC/USD to rechallenge the $26,000 threshold for a potential breakout. This could pave the way for a rally towards the 200-4H EMA near $26,975 in September.