Bitcoin futures worth more than $44 million were liquidated on Monday amidst volatile trading. During this period, the price of Bitcoin, the leading cryptocurrency in terms of market value, fluctuated over $1000, marking a 4% variation. It ranged from a low of approximately $26,400 to a monthly peak near $27,400.
At last check, Bitcoin was trading in the vicinity of $26,700, marking almost a 1% rise for the day.
The exact reasons for these price movements were unclear, as no specific news or fundamental events were directly linked to the fluctuations.
One potential influence could have been a statement from Binance.US’s auditor, who mentioned challenges in verifying Binance’s asset collateralization. This might have contributed to the nervous market sentiment, causing Bitcoin’s price to dip below $27,000.
However, two primary factors seemed to influence the price: 1) the market’s anticipation of the US Federal Reserve maintaining its interest rates in the upcoming week, and 2) technical purchases. Lately, Bitcoin has garnered support at its 21-day moving average and a declining trend evident since the beginning of August.
According to coinglass.com, of the total $44 million futures positions liquidated on Monday, short positions accounted for about $32 million. This is understandable considering Bitcoin touched its monthly peak.
This represents the most significant setback for Bitcoin pessimists since the previous Monday. At that time, the price of BTC momentarily dropped to its three-month low, slipping below $25,000.
The price forecast for Bitcoin took a downward turn in August, as the digital currency dipped beneath both its 2023 growth trajectory and its 200-day moving average (200DMA).
Yet, things seem to be turning around. Bitcoin’s recent rise above its current declining trend and 21-day moving average (21DMA) suggests more optimistic days ahead.
For the time being, Bitcoin seems to be stabilizing in the $25,000 to approximately $28,000 bracket. To reconsider hitting the annual peaks, BTC would need to push past a critical resistance range between $27,700 and $28,500.
Where Next for the Bitcoin (BTC) Price?
This week, macroeconomic factors are anticipated to significantly influence Bitcoin’s price trajectory.
On Wednesday, the Federal Reserve is largely predicted to maintain its current interest rates. However, they are also likely to hint at the possibility of another rate increment later in the year.
Two key releases from the central bank will garner significant attention: the updated economic forecasts and the dot plot summary, which provides insights into the interest rate projections of Fed members. Traders will meticulously analyze these documents. Their primary aim will be to gauge the likelihood of additional rate hikes in 2023 and to predict any potential rate reductions slated for 2024.
Although the majority of investors aren’t anticipating another rate hike within the year, the Fed’s message suggesting its possibility is curbing market enthusiasm. This cautionary tone inhibits speculative pricing concerning rate reductions in 2024 and the years following, providing support for both US yields and the US dollar.
Consequently, the upcoming Federal Reserve meeting might neither detrimentally impact nor notably uplift Bitcoin, especially if the US dollar and US yields maintain their course without significant drops.
Historically, Bitcoin has showcased a negative correlation with both the US dollar and US yields. Given these factors, Bitcoin may continue its trend within the established $25,000-$28,000 range for the forthcoming months.
