Bitcoin, the world’s most valuable cryptocurrency, is currently experiencing a significant decline in price. On September 11, the digital asset reached a low of $24,951, a steep drop from its previous highs in H2 2023. This unexpected dump occurred during the early trading hours of the New York session, causing widespread panic among investors.
The crash on September 11 shattered any hopes of a potential bull market. Bitcoin plummeted below the consolidation phase it had been experiencing over the past few trading days, signaling a bearish breakdown. This downward spiral canceled out the gains that were made on August 31 and introduced a heightened selling pressure since August 17. The subsequent sell-off painted a bearish picture for Bitcoin, leaving traders concerned about its future.
High Trading Volume
Despite the continuous decline, Bitcoin continues to trade with relatively high volume levels. This indicates significant participation from investors and traders, suggesting that the downward trend may persist. The above-average trading volumes also imply that BTC is likely to continue on a downward trajectory, following the noticeable bearish candlestick formation observed on August 17. During this previous drop, Bitcoin experienced a 12% decline, breaching the crucial support level of $28,700.
Bitcoin bears are currently in control of the market, actively reversing the gains that were achieved between June and July 2023. During this period, the price of Bitcoin surged from around $20,000 to a high of $31,800 by the end of July. However, as talks about a potential spot Bitcoin Exchange-Traded Fund (ETF) began to fade, following the SEC’s decision to delay its decision, the price of Bitcoin started to decline.
Critical Fibonacci Retracement Levels
At present, Bitcoin is down 20% from its July 2023 lows but is trading around critical Fibonacci retracement levels from the resistance levels of June to July 2023. Bitcoin and other cryptocurrencies often experience deep retracements, but there is a possibility that the coin may find support around the $25,000 mark. However, if the bearish momentum continues, and the August 17 bear bar prevails, sellers may further unwind gains and potentially push BTC towards its June 2023 lows of approximately $20,000.
Technical analysts have noted that Bitcoin closed below the $25,600 mark at the end of the previous week’s trading session, resulting in the “Death Cross” formation on the Ichimoku Cloud indicator. Historically, when this pattern emerges, Bitcoin prices tend to decline initially before rebounding over the course of several weeks. Similar instances, such as those in June 2021 and January 2022, resulted in Bitcoin dropping 19% and 23% respectively.
Potential Future Scenarios
If the “Death Cross” does indeed occur, there is a possibility that Bitcoin may experience a 21% decline, pushing the coin back to its previous low of $20,000 or even lower. However, before such a significant drop can occur, Bitcoin must first break through strong support levels at $25,600, $24,000, and $23,200. Only then can it retest the $20,300 zone, which marks a crucial threshold for future price movements.
Bitcoin’s recent price decline has raised concerns among investors and traders alike. The unexpected dump on September 11 and the subsequent bearish breakdown have signaled a shift in control from bulls to bears. The high trading volume indicates that the downward trend is likely to persist, potentially pushing Bitcoin to lower levels. Technical indicators, such as the “Death Cross” formation, suggest further declines may be on the horizon. As with any investment, caution should be exercised, and careful analysis of market conditions is essential in navigating the unpredictable world of cryptocurrencies.