Bitcoin (BTC) has recently displayed a noteworthy change in its price trend, with the rate of decline significantly slowing over the past few weeks. This shift hints at potential bullish sentiment in the short term, even as the cryptocurrency contends with high fear of further capitulation by the end of September. The flagship coin has been valiantly defending its support level above $57,000, signaling a potential for positive movement.
Technical Analysis And Market Sentiment
From a technical perspective, experts suggest that Bitcoin has been forming a bullish flag pattern in recent months. This pattern often precedes an uptrend breakout, with many anticipating a surge in the fourth quarter. Historical data supports this outlook, as Bitcoin has historically performed well during this period.
However, the bearish scenario could persist if Bitcoin consistently closes near $54,000 in the coming weeks. In such a case, the cryptocurrency might drop towards the next liquidity range between $48,000 and $50,000.
Economic Factors Influencing Bitcoin
The global economic landscape is undergoing significant shifts that could impact Bitcoin’s trajectory. The Bank of Canada recently reduced its interest rate to 4.25%, marking the third cut since June. Economists anticipate that the Federal Reserve might initiate its first interest rate cuts since the COVID-19 pandemic on September 18. While this economic shift might initially trigger a sell-the-news reaction, it ultimately could catalyze a major bull run, particularly for high-risk assets like Bitcoin.
Evidence of this potential turnaround is already visible. The outflow from U.S. spot Bitcoin ETFs has notably decreased after a period of substantial losses. On Wednesday, the U.S. spot Bitcoin ETFs recorded a net outflow of approximately $37 million, a significant drop from over $287 million the previous day.
Moreover, market data from CoinGlass reveals a notable decline in the supply of Bitcoin on centralized exchanges. Over the past five months, the supply has decreased from 2.68 million to about 2.38 million. Historically, a decrease in Bitcoin supply on exchanges, following a halving event, has been followed by a strong rebound in price.
The Bigger Crypto Picture
Bitcoin’s dominance in the cryptocurrency market has been rising since the FTX collapse in late 2022. However, the rate of this uptrend has slowed in recent months. The approval of spot Ether ETFs in the U.S. and other jurisdictions, alongside spot Solana ETFs in Brazil, has boosted confidence in the altcoin sector.
Also Read: Bitcoin Consolidates At $57K As Business BTC Holdings Surge 500% In 3 Years
This growing confidence in altcoins suggests that Bitcoin dominance may soon reverse, setting the stage for a much-anticipated altseason. The meme coin sector, with its increasing emphasis on Web3 adoption, is expected to remain a focal point during the ongoing macro bull run.
As Bitcoin navigates these complex dynamics, its ability to maintain key support levels and respond to shifting economic conditions will be critical in determining its short-term and long-term trajectory.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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