The recent monthly report by US investment management firm ARK Invest highlights a crucial moment for the Bitcoin price, as it faces key support levels of $52,000 and $46,000. The report notes that Bitcoin’s price movement no longer respects traditional bull market support levels, such as the 200-day moving average and short-term holder cost basis. The mean reversion levels suggest that the on-chain reversion level near $46,000 could serve as a last chance, with ARK defining its overall stance as “bearish.”
In a recent Glassnode report, a potential “source of risk” was identified as short-term Bitcoin holders grapple with unrealized losses, raising concerns of a potential sell-off pressure. Institutional investors also face unrealized losses, including holders of US spot Bitcoin exchange-traded funds (ETFs) who could risk being in the red eight months after their launch. Broad macroeconomic weakness, such as declines in the dollar, employment, and inflation, was also cited as a risk factor. These issues are seen as indicators of a potential recession, with the upcoming September 18th US Federal Reserve interest rate decision adding to the uncertainty.
While a 25 basis point cut is seen as a more favorable outcome for Bitcoin, potentially leading to long-term price appreciation, a more aggressive cut could have the opposite effect, heightening recession fears and potentially causing a significant Bitcoin retracement. Traders currently assign a 27% probability to a 50 basis point cut, according to CME’s FedWatch tool. ARK Invest remains optimistic on Bitcoin despite these bearish indicators, citing historical data supporting the current bull market. The Bitcoin MVRV Z-score, which compares market cap to its cost basis, remains in “bull market territory.”
Even though the potential for approaching key support levels exists, it may present an accumulation opportunity rather than a signal of a bear market. This sentiment is supported by past 10x Research reports, which suggested an optimal bull market entry in the low $40,000 range. Other analysts also point to historical and technical patterns as grounds for a potential breakout in the final quarter of the year, with a six-figure Bitcoin still being considered as a possibility moving towards 2025.
Overall, the speculative nature of the crypto market and the various risk factors facing Bitcoin, including short-term holder sell-off pressure and broader macroeconomic weaknesses, make it a difficult period to predict. While some indicators point towards a potential bearish trend, others remain optimistic about the long-term bullish prospects of Bitcoin. As the market continues to evolve and react to external factors like the US Federal Reserve’s interest rate decision, investors will need to carefully monitor developments in order to make informed decisions.
