Bitcoin (BTC) Market Overview: Short-Term Holders Grapple with Losses as Bearish Trends Emerge

Bitcoin (BTC), the leading cryptocurrency, is currently trading at approximately $56,785. This represents a 22% decline from its peak price of over $73,000.

Bitcoin (BTC) price remained under pressure on September 5, as the world’s leading cryptocurrency dropped below a key technical support level. The downturn follows a 22% decline from BTC’s peak price of over $73,000.

Bitcoin price now below crucial support

Bitcoin price dropped below the 0.382 Fibonacci retracement level of its recent rally from the August 19 low to the September 3 high. This level, near $56,230, has now been tested as resistance following the recent sell-off.

Now that BTC price trades beneath this Fib level, it risks sliding further to test lower support levels around $54,900 or the 0.236 Fib retracement. Historically, each time this support has been tested, BTC price has mounted a slight recovery, suggesting concentrated buy orders at this level.

However, maintaining this support is crucial to prevent further downside momentum. This level has acted as both support and resistance throughout the year, and it also coincides with the 200-day simple moving average (SMA).

Bitcoin price 1-day chart. Source: TradingView

On the 1-day price chart, several technical indicators also support a bearish outlook for Bitcoin price. Over the past six months, BTC price has consistently formed lower highs, reflecting a prevailing bearish trend.

The Awesome Oscillator (AO), which measures market momentum, has remained predominantly negative since August, reinforcing the bearish outlook. Red histogram bars on the AO typically signal sell conditions and confirm ongoing bearish market sentiment.

Furthermore, the 20-day Exponential Moving Average (EMA) recently converged with the 200-day EMA from above, indicating a weakening of short-term momentum. This technical crossover often precedes significant market corrections or trend reversals.

Bitcoin price stalls at resistance, 展板further declines

Recent price action showed Bitcoin price facing strong resistance at the 0.5 Fib retracement level of its recent sell-off from the August 19 high to the September 3 low. This level, around $58,530, capped several attempts at further gains.

As a result, BTC price slid lower on September 4, forming a bearish engulfing candle on the 1-hour price chart. This price pattern typically occurs when the opening and closing prices of a candle both engulf the prior candle's high and low, respectively. In this case, the candle also closed in the lower half, indicating bearish price action.

Bitcoin price 1-hour chart. Source: TradingView

After testing the 0.5 Fib level as resistance, BTC price dropped further on September 5, breaking below the 0.382 Fib level, which acted as support throughout the recent rally from the August lows.

Now that this level has been tested as resistance, it risks sliding further to test lower support levels around $54,900 or the 0.236 Fib retracement. Historically, each time this support has been tested, BTC price has mounted a slight recovery, suggesting concentrated buy orders at this level.

However, maintaining this support is crucial to prevent further downside momentum. This level has acted as both support and resistance throughout the year, and it also coincides with the 200-day simple moving average (SMA).

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