Bitcoin (BTC) has entered the second week of September under significant pressure, facing crucial resistance levels as traders eye potential downturns. Over the weekend, Bitcoin’s price hovered below the $112,000 mark, with traders increasingly concerned about a possible 10% correction or worse. As the Consumer Price Index (CPI) week unfolds, market participants are speculating on how much the Federal Reserve may cut interest rates in the coming meeting.
Recent data suggests that the rotation of institutional investments from Bitcoin to Ether-based exchange-traded products (ETPs) may have reached its conclusion. Over the past month, Bitcoin whales have resumed mass selling, reminiscent of the bear market seen in 2022. Additionally, Binance is drawing scrutiny as market participants warn of a potential price top for Bitcoin.
The price action has managed to avoid significant volatility around the recent weekly close, but $112,000 is still a critical target for traders aiming for a possible flip from resistance to support. Analyzing exchange order-book liquidity, trader CrypNuevo identified $106,700 as another important downside level. He indicated that should previous lows become resistance, the price might try to hit liquidation levels at around $106,700.
Market analysts are also deliberating how low the Bitcoin price could go in the event of capitulation, with $100,000 being a critical threshold that many view as a line in the sand. Fibonacci retracement levels suggest that a retest at this price is possible, especially if the market experiences a significant downturn, termed the “worst case scenario.” Some analysts, like those from the Telegram analytics channel Coin Signals, are projecting that BTC could drop as much as 30% from its recent high of $124,000, potentially bottoming around $87,000 by the end of September or the beginning of October.
As market uncertainty looms, upcoming economic reports, including the Producer Price Index (PPI) and CPI, are they critique of the Federal Reserve’s steady interest rate policy. While central banks in Europe and Canada have moved to implement rate cuts, the Federal Reserve’s decision to maintain rates has formed a stark contrast, creating skepticism about U.S. monetary policy amidst rising inflation and growing fears of recession. These economic signals appear to have implications for wider market trends, with experts emphasizing the importance of a robust economic outlook for the performance of equities and other assets, including Bitcoin.
On the institutional front, there are indications that the previous outflow from Bitcoin to Ether is receding. Last week’s inflows to Bitcoin-denominated ETPs marked a reversal, with $444 million flowing into Bitcoin products while Ether products faced net outflows exceeding $900 million.
However, a concerning trend is observed among Bitcoin’s largest investors. Recent analysis from CryptoQuant shows that whale exposure to Bitcoin is shrinking dramatically, with over 100,000 BTC sold in the past thirty days. This reduction in whale reserves is reminiscent of behavior seen during the last bear market, raising red flags about future price stability.
Compounding these issues, liquidity in the Bitcoin futures market, particularly on Binance, has started to dwindle. Current data from CryptoQuant indicates a concerning trend in the Taker Buy/Sell Ratio. This metric, which reflects buying strength against selling volume, indicates weakening liquidity—potentially foreshadowing price volatility if the trend continues.
In summary, Bitcoin’s near-term outlook remains clouded by risk factors, including institutional selling, economic uncertainty, and declining liquidity. As traders navigate these turbulent waters, the looming federal economic reports may play a critical role in shaping the digital currency’s trajectory in the coming weeks.
