Bitcoin started August with a dip to its lowest price in the last fourteen days. Although it recovered, this set the tone for the rest of the month.
The apex coin lost over 18% during the first five days of the month. Kicking off at $64,612, it saw its first wave of massive selloffs on the first day. It retraced to a low of $62k but rebounded. However, the decline continued, and BTC registered losses of almost 6% the next day.
The crypto market had its biggest decline on August 5 as the apex coin retraced to its lowest valuation since February. It started the day at $58k but crashed, breaking the $50k support before rebounding at $49,500. The apex coin saw significant recovery after the dip but failed to erase the losses. As a result, it lost 7%.
Bitcoin saw massive bullish actions three days later as it recorded its biggest surge. It started trading at $55k and surged, breaking $60k and $62k. The uptrend continued until it peaked at $62,700 but faced rejections and closed with gains exceeding 11%.
The bulls made another notable move on August 23, bouncing off $60k. BTC surged, reclaiming $62,000 and advanced to $64k. However, efforts at flipping $65k failed as it peaked at $64,988. Nonetheless, it closed with gains exceeding 6%.
Bitcoin is trading at $59k after losing $60k on Tuesday. The current price brings its August losses to over 8%. What were some of the driving forces behind the ups and downs?
Fundamentals
A notable event occurred with a massive transfer of approximately $1.88 billion worth of Bitcoin, which led to a drop in prices. Such a large transfer often unsettles markets as it signifies a significant increase in supply that may negatively impact Bitcoin prices.
In an attempt to provide clarity, data from Arkham Intelligence revealed that both the Bitcoin addresses involved in the transfer belonged to Binance, indicating that it might have been an internal transfer. The realization should have alleviated concerns among market participants.
Another significant development was the movement of 13265 Bitcoins, valued at approximately $780 million, by the bankrupt former exchange Mt.Gox. The action raised speculation that Mt.Gox might be resuming repayments to creditors, especially considering its previous transfer of 47229 Bitcoin on July 30th. Surprisingly, Mt. Gox’s creditors opted to retain their Bitcoin instead of selling it.
On August 20, U.S. spot Bitcoin ETFs experienced a surge in inflows, receiving $88 million over two weeks, according to early data from Farside Investors. Additionally, data from AMBCrypto suggested that many market participants were capitalizing on short-term Bitcoin rallies, potentially contributing to the recent selloffs when Bitcoin approached key resistance levels.
El Salvador’s National Bitcoin Office (ONBTC) initiated a program to provide Bitcoin training and certifications to 80,000 government employees. The move aimed to educate public workers on managing and formulating policies for the legal use of Bitcoin. The comprehensive training, Certification in Public Administration 1, comprises seven parts and spans 160 hours, offered online.
Furthermore, El Salvador’s commitment to transparency was evident in the launch of its proof-of-reserves website, which provides real-time data on the country’s Bitcoin reserves.
In the tech realm, Stacks, a layer-2 blockchain that enhances the Bitcoin network, commenced its Nakamoto upgrade to facilitate faster transactions by decoupling the block production schedule from Bitcoin’s.
The Nakamoto upgrade introduces a new method of producing Stacks blocks. It incorporates a proof-of-transfer consensus algorithm that involves burning Bitcoin to mine Stacks blocks and receive rewards.
The development also entails the rollout of sBTC, a bridging asset that allows users to connect their Bitcoin to the Stacks economy. This could potentially offer greater utility and functionality, including smart contracts and decentralized finance-related capabilities.
While the long-term implications of these advancements were deemed positive for Bitcoin’s viability, they also triggered short-term instability, evident from STX, the network’s token, and the broader digital asset market experiencing declines following the implementation of the Nakamoto upgrade.
How Will Bitcoin Perform in September?
Bitcoin is heading to one of the most bearish months. Historically, September is the most bearish month for the apex coin as it loses over 5% on average. Such records reduced optimism for the coming thirty-day session.
Source: RoverCC
Nonetheless, fundamentals may make a difference this time as several events are lined up. One such event is the upcoming FOMC meeting. Following speculation of a possible reduction in interest rates, the bulls are looking forward to the announcement. Such a drop will result in further price increases for Bitcoin as investors move funds to different sectors, including crypto.
The ex-Binance CEO will also be free next month after serving his sentence. Previous reports had it that he was no longer in a maximum-security detention center as he is close to completing his time. His release will also result in notable bullish action for the apex coin.
How high will it go?
It is worth noting that the apex coin will start the ninth on a bearish note, having seen several corrections during the first half.
Indicators like the moving average convergence divergence is pointing to further retracement. It had a negative divergence a few days ago and the trend is ongoing. There is no sign of recovery in sight, as on-chain data are still bearish.
The metric shows low funding rates from almost all key regions. The Asian market is yet to resume buying. As a result, the Korea Premium is still negative. Bitcoin products also saw a small decline in buying volume as institutions failed to continue buying.
The United States joined the list of bearish regions as traders halted stacking up the asset. The Coinbase Premium is negative at the time of writing.
All metrics indicate further declines. There is a chance the apex coin retraces below $55k. Nonetheless, the previously highlighted event will happen in the middle of September, which may also trigger the surge.
Following the start of the uptrend. Bitcoin may reclaim $60k, climbing above the 38% Fibonacci retracement level. The bulls will look to reclaim $62k and build momentum around it. After breaking the mark, BTC will continue the hike in a bid to retest $65k. It remains to be seen how high it will go afterward.
Elendu Benedict | September 4, 2024
