Bitcoin is struggling to keep its price above $80K. It dropped to a low of $79,300 in the early hours of Monday but is trading slightly above its opening price.
Following trading activity over the last 20 hours, there have been no significant indications of the next price direction. However, there is growing concern that the apex coin may be gearing up for a massive retracement over the next four days.
One reason for these concerns may be the several economic events scheduled for this week. Before delving into these fundamentals, it is important to examine how prices performed last week.
The apex coin ended the session with losses of 2%. This close may be surprising, as BTC saw a two-day uptrend during the first half of the week. The largest selloff occurred on Thursday, when it closed with losses exceeding 3% and continued downward over the next three days.
Away from the correction, the apex coin briefly broke above its 14-day high on Wednesday. One factor that may have contributed to the uptick was reports that the US was working on a deal to end the war in Ukraine. The excitement following the news soon faded, resulting in a decline the next day.
While the asset experienced the bulk of its volatility during the weekdays, a critical event occurred over the weekend. Recall that following Tuesday’s uptick, an earlier analysis noted that, to confirm a breakout, the apex coin needed to post another candle above $84K. Such a move could result in a surge above $86K.
Conversely, a similar move below $81K would signal a further decline. This confirmation came on Sunday when the apex coin recorded its first daily candle below $81,000 since September 20.
Will Bitcoin Retrace Now?
The expected confirmation is now present on the 1-day chart. Based on the breakout, BTC will likely retrace further in the coming days.
This may begin this week, given the two key events about to take place. The first is the FOMC meeting, which starts on Tuesday. Policymakers will announce their interest rate decision on Wednesday. Interestingly, the buzz surrounding the announcement is relatively low compared with previous meetings.
However, a rate cut is almost out of the question, while the likelihood of a 25 bps increase is significant. Others speculate that the rate will remain unchanged. In a nutshell, there is uncertainty about what the decision will be. However, neither option is particularly bullish. As a result, traders may begin pricing in these possibilities starting Tuesday.
Following Wednesday’s decision, Thursday brings a flurry of economic data. Weekly jobless claims and the PCE report are the most significant releases, and the forecasts for both are bearish. Analysts are currently expecting increases in these metrics. They may trigger another wave of selling pressure if the figures come in as expected or higher.
From a fundamental perspective, this week is packed with economic events, and the forecasts are negative. These factors increase the likelihood of further declines amid the current breakout.
Interestingly, on-chain data points to retail investors as one of the drivers of the selloffs in recent weeks. A recent analysis by Darkfost indicates that this cohort has ramped up inflows into Binance since the start of October. On a broader scale, these inflows have reached a six-month high.
While moving assets to trading platforms does not always indicate immediate selling, it may suggest rising bearish sentiment. However, another indicator identifies the price levels at which traders are selling. The realized price band shows when selling takes place at a particular price.
At the time of writing, it is rising, indicating that investors are selling their assets. This also helps explain the downtrend throughout October.
Where’s Bitcoin Headed?
The 1-week chart offers technical insight into why the apex coin is currently declining. It tested the upper Bollinger Band in the week starting September 21 but was rejected. Another attempt followed, with the same result.
Traditionally, breaking above the upper band may be a sell signal, and prices are playing out in line with this metric. BTC has been declining over the last three weeks, shedding almost 8%. During a bull market, it is normal for an asset to move between the upper and middle Bollinger Bands. The same trend may play out in the coming weeks.
The SMA is currently at $73K. If history is anything to go by, a drop to this level is likely. However, previous price movements suggest that such a decline may represent the worst-case scenario.
Between August and September, the apex coin created a notable demand concentration around $75K. Prices may rebound at this level.
On the 1-day chart, the apex coin may be due for a rebound. It has traded close to the lower Bollinger Band for most of the last 14 days. While it briefly broke above the middle band last week, it has returned to the lower band.
Based on the highlighted fundamentals, the likelihood of a massive rally over the next six days is notably low. Bitcoin may retrace to a new two-month low during this period, and previous price movements point to $77K as the next stop.
While the odds are stacked against the bulls, it is worth noting that ETF flows turned positive last week, ending the two-week outflow streak. If buying continues, prices may surge as high as $82K.
