After a quiet weekend, as the cryptocurrency market returns to "business as usual," it seems that the dust has settled on last week's volatility.
Bitcoin finds itself hovering in familiar territory, but without a trend, traders and analysts are still undecided on its next move.
Downward price predictions for BTC are certainly not lacking—recent weeks have seen $25,000, $24,750, and even $23,000 become popular targets.
On the other hand, bulls are believed to face a more challenging task in regaining market momentum.
With network fundamentals consolidating recent gains and macro markets calm, the question of whether September 2023 will be a typical single-digit loss month for BTC/USD has now become a topic of discussion.
Cointelegraph explores the main factors that will influence BTC price trends in the coming days.
Weekend Bitcoin price cuts Bitcoin shorts
Bitcoin's off-exchange trading over the weekend brought almost no surprises—given that the US stock market only opened on September 5, this situation may continue.
Cointelegraph Markets Pro and TradingView's data show that for most of the past two days, Bitcoin/USD has fluctuated within a $200 range, but minor fluctuations have masked the presence of speculative exchange participants.
Popular trader Skew noticed this, and his uploaded order book data shows that the reason Bitcoin briefly broke $26,000 was due to the failure of short positions.
"All it took was for someone to figure out where the stop loss was, market buy a few million dollars of spot, and then sell it after forcing some shorts to liquidate," additional X (formerly Twitter) comments added.
Further analysis of the Bitcoin spot market questions whether the weekly closing price of around $25,970 will ultimately become a false sense of security for the bulls.
According to Cointelegraph, Skew has set $25,900 as the level to maintain until the weekly candle closes.
However, for trader and analyst Rekt Capital, any price significantly below $26,000 would raise concerns for longer time frames.
He warned over the weekend that failure to reclaim this level would mean the risk of a double top structure in 2023, with a Bitcoin price ceiling of around $31,000 and a long-term downtrend in the future.
"A weekly candle close below $26,000 (green) could confirm a double top, initiating the breakdown process," he commented on a chart showing this setup.
Fed speakers focus on macro week
Meanwhile, a cool macro week may bring some relief to risk asset traders.
There are almost no important macroeconomic data in the US for the next four days, with the focus on the Federal Reserve itself.
Several senior Fed officials will comment on the economic situation this week before the Fed makes its interest rate tightening decision on September 19. This includes Atlanta Fed President Raphael Bostic and New York Fed President John Williams.
"Although the week is short, everything is about the Fed," financial commentary resource "Kobeissi Letter" summarized on X, listing the main diary dates for the coming days.
It added that the Fed's policy is "still far from clear" before the interest rate decision.
This summer, Bitcoin's sensitivity to Fed comments has become less pronounced, even the remarks of Fed Chairman Jerome Powell have not had a significant impact on Bitcoin's price trend.
Nevertheless, officials' comments could overturn market expectations for the Fed's inflation fight.
At the time of writing, according to data from the CME Group's FedWatch tool, the vast majority of the market expects (93% certainty) that rates will remain unchanged in September.
Difficulties caused by the fall from historical highs
After soaring to a new all-time high two weeks ago, Bitcoin's mining difficulty is decreasing.
In a moderate consolidation, the expected difficulty adjustment on September 5 will decrease by around 2.4%.
From a historical perspective, this is not uncommon, especially considering the 6.5% increase in mid-August—despite the opposite trend in BTC price, this increase still occurred.
CryptoSlate's research and data analyst James Straten pointed out that Bitcoin miners' BTC inventory is decreasing.
"At the same time, miner balances have decreased by about 4,000 BTC, mainly from F2Pool, which has halved its BTC balance," part of X's weekend comments wrote.
Straten added that any further decline in Bitcoin's price could put additional pressure on miners, exacerbating the trend of F2Pool.
He warned, "If Bitcoin falls again, we may see another round of miner capitulation."
In response, IT Tech, a contributor to the on-chain analysis platform CryptoQuant, mentioned the "slight" correlation between BTC price declines and miners sending BTC to exchanges.
"This action certainly adds selling pressure, ultimately leading them to sell in the market," a recent excerpt of comments stated.
IT Tech noted that the scale of BTC sales is not large, but it occurs at the "worst time."
Record-breaking dormant Bitcoin supply
Behind the scenes, Bitcoin's supply is gradually becoming the property of long-term holders.
The latest data from on-chain analysis company Glassnode reveals several new records associated with long-term stored BTC.
The percentage of the mined supply that has been dormant for three years or longer has now reached 40.538%, the highest level ever.
The equivalent measure of tokens held in wallets for at least five years is currently at 29.637%—also a new record.
Supply scarcity is a welcome sight for Bitcoin bulls, as their conclusion is that any future demand for Bitcoin will lead to buyers competing for less supply.
In a recent analysis, Straten also pointed out that Bitcoin speculators (often referred to as short-term holders) have distributed BTC into the market again.
"Bitcoin short-term holders have once again sent about 20,000 BTC at a loss to exchanges," he wrote over the weekend.
"The fourth-highest amount this year. This will continue to exacerbate the record difference between long-term holder and short-term holder supply."
Accompanying Glassnode data shows that the amount of BTC sent by short-term holders to exchanges is at a loss.
Interest takes us back to 2020
This year, Bitcoin has struggled to become a mainstream topic for non-crypto consumers, as evidenced by Google Trends data.
Standardized search interest has now returned to levels before the BTC/USD breakthrough of $20,000 at the end of 2020.
Search activity closely correlates with BTC price trends, and the lack of significant upward events in the entire second quarter seems to have led to a flat mainstream attention.
Meanwhile, in the cryptocurrency space, ordinary investors are feeling fearful.
According to the Crypto Fear and Greed Index, "fear" characterizes the overall market sentiment at present.
The index is at 40/100, in the familiar area since mid-August when Bitcoin fell by 10%.
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Thank you for reading, see you next time!
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