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Bitcoin (BTC) begins a new week facing challenges at $26,000, marking August as its most disappointing month of 2023.
The strength of BTC’s price remains questionable following a sudden drop 10 days prior, with buyers unable to regain market dominance to initiate a recovery bounce.
The future outlook is equally unclear, as September has historically been a weak month for Bitcoin, and with the end of August approaching, could another unexpected decline be imminent?
This week, macroeconomic factors are taking a backseat, with the Personal Consumption Expenditures (PCE) Index data being the focal point in an otherwise quiet week for crypto market dynamics.
Nevertheless, traders and analysts are remaining vigilant, and with no signs of a recovery on the horizon, many are preparing for potentially worse outcomes.
Cointelegraph examines the key BTC price performance discussions for the upcoming week.
BTC price declines as monthly close approaches
There are no surprises regarding how Bitcoin concluded its latest weekly candle, especially with prior knowledge of past closes.
Even though it maintained $26,000 until the close, BTC/USD quickly fell afterward, dipping to $25,880 before stabilizing slightly higher, according to data from Cointelegraph Markets Pro and TradingView.
BTC/USD 1-hour chart. Source: TradingView
This represented multi-day lows, part of what popular trader Skew anticipated could be pressure from short sellers as the new week begins.
“Shorts continue to accumulate into the weekend, anticipating some movement around the US Futures opening and into the Monday EU session,” a portion of analysis on X (formerly Twitter) stated.
Skew also characterized weekend BTC activity as “max pain price action.”
The monthly close was a significant topic among market participants, with volatility expected after August recorded 11% losses.
Keith Alan, co-founder of the monitoring resource Material Indicators, predicted a descent to multi-month lows.
“Whales aren’t buying yet, and neither am I,” he remarked alongside a chart of the Binance BTC/USD order book.
“Expecting volatility to persist through the monthly candle close. Patiently waiting to test the local low.”
In addition to low whale order volume, the accompanying order book chart indicated a general lack of bid liquidity, with $25,500 attracting only slight interest.
BTC/USD order book data for Binance. Source: Keith Alan/X
“I am looking for a signal to enter where we drop to $25,000 lows, reclaim and surge,” popular trader Crypto Tony concurred.
“Or if we convert $26,700 into support. No entry before that on #Bitcoin as we are just mid-range, so no secure entry just yet.”
BTC/USD annotated chart. Source: Crypto Tony/X
Beyond the downside, moving averages that previously served as support before the crash may now function as resistance, warned popular trader and analyst Rekt Capital.
“The BTC bullish momentum moving averages may act as resistance,” he summarized alongside the weekly chart.
BTC/USD annotated chart. Source: Rekt Capital/X
Further analysis anticipated a lower low formation to emerge on weekly timeframes, potentially forming a “subtle rising wedge.”
BTC/USD annotated chart. Source: Rekt Capital/X
August risks being the worst in eight years
It is well-known that Bitcoin has struggled this month — even by August standards, which have seldom offered bulls any reason to celebrate.
BTC/USD is down 11% this month, and with the weekly close approaching, anticipation is rising among market watchers.
A review of comparative data from monitoring resource CoinGlass indicates that August 2023 is already competing with last year to become Bitcoin’s worst August since 2015. BTC price fell 13.9% in August 2022, marking the start of a six-month downturn.
BTC/USD monthly returns (screenshot). Source: CoinGlass
However, some analysts believe that September could also turn out to be nearly as poor based on historical trends.
“Could Bitcoin Crash to $22,000 In September?” Rekt Capital questioned last week in part of an X post.
“To answer this question, we need to first focus on August. What was the worst BTC August drawdown in history? -17% in 2014 and -18% in 2015. Currently in 2023, $BTC is now down -16%. If BTC were to drop -18% this August, BTC would fall to ~$24700. But that might not be the end of the retracement.”
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Continuing, Rekt Capital noted that September typically presents a “single-digit drawdown.” In light of its recent double top on weekly timeframes, a $22,000 target aligns.
“So if BTC retraces, say, an additional -10% in September… That would imply a price drop to ~$22200,” he concluded.
“Then that would approximately match the Measured Move target for the Double Top breakdown of ~$22000.”
BTC/USD annotated chart. Source: Rekt Capital/X
Bitcoin’s “longest bear market in history”
Examining year-on-year (YoY) percentage returns for BTC/USD reveals the true depth of the recent bear market.
Michaël van de Poppe, founder and CEO of trading firm Eight, concluded that it has indeed been Bitcoin’s “longest bear market in history.”
“The current bear market is relatively comparable to what we’ve witnessed in 2015. A period of sideways movement, where confidence in crypto is gradually diminishing, despite solid fundamental growth,” he expressed in recent reflections on the crypto market.
“Right now, the price of Bitcoin is nowhere near the valuation of the peak in November ’21. It’s down more than 50% and in a bear market lasting 490 days.”
An accompanying chart compared the current 490-day negative YoY returns to previous periods, with 2015 lasting 386 days.
Van de Poppe added that even positive news events, such as the anticipated approval of the United States’ first Bitcoin spot price exchange-traded fund (ETF), have yet to resonate in the market.
“The reality is, during the current period, these events are not being reflected in price at all,” he stated.
“They lag behind as the market remains in ‘bear market mode,’ as the price has been declining for the past two years.”
BTC/USD YoY performance annotated chart. Source: Michaël van de Poppe/X
PCE data follows muted crypto Jackson Hole response
Bitcoin and altcoins have shown minimal reaction to macroeconomic developments in recent weeks.
Even changes in Federal Reserve interest rates and data releases such as the Consumer Price Index (CPI) have had a barely noticeable effect on markets.
Last week’s remarks from Fed Chair Jerome Powell at the annual Jackson Hole Economic Symposium continued this trend, even as CME Group’s FedWatch Tool indicated over 80% odds of a pause in rate hikes starting next month.
Fed target rate probabilities chart. Source: CME Group
This week, despite containing the Fed’s preferred inflation measure in the form of PCE, could very well turn out to be no different.
PCE data is set to be released on Aug. 31, just hours before the Bitcoin monthly close, with Sep. 1 providing nonfarm payrolls and unemployment data.
Huge week for ALL things related to economic data, volatility is back.
Jobs, inflation, housing data and more.
We're publishing our trades for the week shortly.
In 2022, our calls made 86%.
Subscribe to access our analysis and see what we're trading: https://t.co/SJRZ4FrfLE— The Kobeissi Letter (@KobeissiLetter) August 27, 2023
For macro markets, however, financial commentary resource The Kobeissi Letter promised an “action-packed week.”
“Huge week for ALL things related to economic data, volatility is back,” it summarized in part of its latest X analysis.
Record hash rate reflects “miner bull run”
Could Bitcoin miners already be offering a silver lining for bulls as the year comes to a close?
Related: Bitcoin velocity hits lows last seen before Q4 2020 BTC price breakout
As Cointelegraph reported, one theory suggests that Q4 will see miners bidding Bitcoin higher in anticipation of the April 2024 block subsidy halving, which will reduce their reward per mined block by 50%.
They are expected to join “smart money” in this endeavor, generating excitement around the halving narrative, even if the broader market typically reacts to emission changes after the fact.
Continuing the discussion, James Straten, research and data analyst at crypto insights firm CryptoSlate, noted that Bitcoin’s hash rate is already entering unprecedented levels.
“The Bitcoin hash rate just reached 400 th/s for the first time ever. It is astonishing, considering the energy challenges in Texas and the rising cost of electricity globally,” he informed X subscribers.
“This is the miner bull run leading up to the halving next year. Similar explosive hash rate growth that preceded the 2020 halving.”
Bitcoin hash rate annotated chart. Source: James Straten/X
Hash rate is an estimate of the processing power dedicated to mining, and while it is impossible to measure precisely, data from on-chain analytics firm Glassnode indicates not only new all-time highs but a series of upward adjustments contrasting with flat or declining BTC price performance.
Last week, Bitcoin also experienced one of its largest upward difficulty adjustments of 2023, pushing the on-chain fundamental metric to all-time highs of its own.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
