Bitcoin Price Falls To $26,000 With No Silver Lining In The Cloud For The Asset Class ⋆ ZyCrypto

Bitcoin Price Falls To ,000 With No Silver Lining In The Cloud For The Asset Class ⋆ ZyCrypto

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After days of downward sliding, Bitcoin (BTC) fell to $26,000, fuelling speculation for tougher times ahead for the most prominent cryptocurrency.

As the week rolled by, BTC reached a new low of $25,880 before recapturing the $26K mark again. As the asset prices fell, so did its transaction volumes and market dominance, with pundits blaming the slump on a “lack of new catalysts” in the ecosystem.

While macroeconomic sentiments remain grim for Bitcoin, traders are turning to technicals for any silver linings in the dark clouds. However, on-chain metrics paint a sordid picture for the asset class, with experts urging investors to brace themselves for the wild ride ahead.

“The technical picture for Bitcoin remains bearish on weekly timeframes, as the price is below its 200-week average and outside of its ascending channel,” said Alex Kuptsikevich, an on-chain analyst. “The most likely short-term outlook is for a decline to the $23.9-24.6K region.” 

Several key events have shaped the price of Bitcoin, including the speculated sale of SpaceX’s BTC holding, China’s Evergrande saga, and the rise of treasury yields in the US. Kuwait’s digital asset ban may have contributed to BTC’s recent slump.

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With yields at their highest in nearly 13 years, investors are more likely to sink funds in bonds rather than BTC, given its lacklustre form since the start of the year.

Over the weekend, the US Federal Chair Jerome Powell hinted that the banking regulator is ready to hike interest rates in its long-running battle with inflation, which could adversely affect BTC in the short term.

“The FOMC is prepared to raise rates further if appropriate and intends to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective,” said Powell.

Market participants are keeping their eyes on key events, including the FOMC’s meeting in September and the release of the Consumer Price Index data for August.

In the long term, the prospects of approval for a spot-based Bitcoin exchange-traded fund (ETF) and a Bitcoin halving are poised to send the asset on a rally.

The historically bearish September

Traditionally, September has not been favourable for Bitcoin, with on-chain data indicating a streak of bearishness. Between 2011-2023, Bitcoin recorded 7 negative September, ending with lower prices than at the start of the month.

After El Salvador adopted BTC as legal tender in September 2021, the price of the asset soared past $50,000 but a series of unfortunate events saw BTC close the month with prices under $43K.

While September leaves a bad streak for the asset, investors anticipate a spike in October, with returns usually hovering around 13%.

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