Bitcoin's September Price Dance

On the eventful day of September 8th, Bitcoin witnessed a rather modest decline of approximately 1.75%. This dip brought its price to hover at the vicinity of $25,850, effectively erasing the majority of gains that had been painstakingly accrued mere hours prior.

BTC/USD daily price chart as provided by TradingView  

Bitcoin's price experiences a technical adjustment

The enigmatic journey of Bitcoin's price, bearing the symbol BTC, has been a tale of uncertainty in the month of September. It has oscillated between minor gains and losses, resembling the ebb and flow of a capricious tide, as market liquidity steadily wanes.

The apparent vacillation among traders can be chiefly attributed to the prolonged deferral of approval for a spot Bitcoin exchange-traded fund (ETF). Adding to the perplexity is the looming uncertainty regarding the imminent decision on interest rates by the Federal Reserve this month, a matter of concern highlighted by ARK Invest.

As a consequence, Bitcoin's price finds itself ensnared within a constricted trading range, delineated by a formidable resistance level at $26,450 and a sturdy support level at $25,550. This narrow corridor has likely compelled traders to embrace a stratagem of procuring at the comforting embrace of the support level and parting ways at the formidable resistance level.

Daily price chart for the BTC/USD pair, sourced from TradingView  

The same strategic ploy appears to have been the driving force behind the sell-off that unfolded on September 8th. It was a moment when the absence of fervent buying enthusiasm in the proximity of the $26,450 resistance barricade spurred a retracement in the BTC/USD pair.

An increase in the Bitcoin holdings on cryptocurrency exchanges

In addition to market dynamics, there was a minor uptick in the balance of Bitcoin residing on cryptocurrency exchanges, potentially exerting a gravitational pull on prices. Notably, the coffers of Bitcoin on these trading platforms had swelled from a tally of over 2.03 million BTC to a slightly more plump 2.05 million BTC as September unfolded, further contributing to the weight on the market's equilibrium.

Bitcoin reserves held by cryptocurrency exchanges. Sourced from CryptoQuant  

Liquidations of long positions

The cascading effect of the September 8th Bitcoin sell-off cascaded through the derivatives market, triggering a cascade of long liquidations. Notably, the downturn in the spot BTC price led to the liquidation of long positions amounting to a total of approximately $7.78 million on that particular day. In essence, this compelled traders to liquidate their Bitcoin collateral to offset their borrowed obligations, adding an additional layer of intensity to the downward pressure in the market.

Heatmap illustrating cryptocurrency liquidations. Sourced from TradingView  

What is the likely direction of the Bitcoin price in the near future?

As we look forward, gazing into the technical abyss, the September 8th sell-off succeeded in pushing the Bitcoin price beneath its 50-period, four-hour exponential moving average (50-4H EMA), marked by the crimson undulation in the chart. 

4-hour price chart for the BTC/USD pair, provided by TradingView  

This sequence of events heightens the likelihood of BTC perpetuating its descent towards the hallowed ground of $25,550 in the forthcoming days. This fortuitous level coincides with a confluence of support, combining a horizontal plateau (at the nadir of the crimson bar) with a descending trendline (highlighted by the ebony strokes).

Conversely, should BTC manage to reclaim the 50-4H EMA as its ally, it may position the BTC/USD pair to embark on a daring reconnaissance mission towards $26,000, potentially signaling a rupture in the prevailing pattern. In this optimistic scenario, the Bitcoin price might muster the strength to embark on a spirited rally toward the 200-4H EMA, characterized by the cerulean wave, located tantalizingly close to $26,975, with the date set for this endeavor being the month of September.