Weekly close raises concerns of BTC price ‘double top’ — 5 key points to consider in Bitcoin this week

Bitcoin (BTC) begins its first full week of September with its price at a pivotal point — will it reclaim $26,000?

Following a calm weekend, the volatility from the previous week seems to have settled as cryptocurrency markets revert to a state of normalcy.

Bitcoin remains in a well-known range, yet the absence of a clear trend leaves traders and analysts uncertain about its forthcoming movements.

There is certainly an abundance of bearish BTC price forecasts — targets of $25,000, $24,750, and even $23,000 have gained traction in recent weeks.

Conversely, bulls appear to face a more challenging endeavor in regaining market momentum.

With network fundamentals poised to solidify their recent gains and macro markets remaining subdued, the discussion around whether September 2023 will witness typical single-digit losses for BTC/USD has emerged.

Cointelegraph examines the key elements affecting BTC price movements in the days ahead.

Weekend Bitcoin price disrupts BTC shorts

Bitcoin presented few surprises during off-hours weekend trading — a trend that may persist with U.S. equity markets set to reopen on Sep. 5.

BTC/USD 1-hour chart. Source: TradingView

For the majority of the past two days, BTC/USD fluctuated within a narrow $200 range, as indicated by data from Cointelegraph Markets Pro and TradingView — although slight upward and downward movements hinted at the involvement of speculative exchange participants.

Popular trader Skew noted these fluctuations, sharing order book data that revealed failed shorts contributing to Bitcoin’s brief excursions above $26,000.

$BTC
Positions are still getting blown out in $200 price moves on a sunday lol
this small pop was shorts getting blown out or closing at market pic.twitter.com/7ih2KpjEEq

— Skew Δ (@52kskew) September 3, 2023

“All it took was someone figuring out where stops were and market buying a few mil in spot then dumping it after forcing out some shorts,” part of additional commentary on X (formerly Twitter) stated.

Further analysis of the BTC spot market questioned whether the weekly close, which settled around $25,970, would serve as a strategy to provide bulls with a false sense of security.

$BTC
Operation save the 1W or is it operation trap the bulls into tuesday? pic.twitter.com/pP4JbeHzXC

— Skew Δ (@52kskew) September 3, 2023

As Cointelegraph reported, $25,900 was already identified by Skew as the critical level to maintain through the weekly candle close.

However, fellow trader and analyst Rekt Capital expressed concern that any significant dip below $26,000 could pose risks on longer timeframes.

He cautioned over the weekend that failing to reclaim that level could lead to a double top structure for 2023, with the $31,000 area acting as the BTC price ceiling and potential for extended downside.

“A BTC Weekly Candle Close below ~$26,000 (green) would likely confirm the Double Top to kickstart the breakdown process,” he remarked on a chart illustrating the setup.

BTC/USD annotated chart. Source: Rekt Capital/X

Fed speakers dominate macro week

A relatively calm macro week may provide some relief for traders of risk assets.

The upcoming four-day week in the U.S. features minimal significant macroeconomic data, with the Federal Reserve taking center stage instead.

In anticipation of the crucial interest rates decision on Sep. 19, various senior Fed officials will share insights on the economic landscape this week, including Atlanta Fed President Raphael Bostic and New York Fed President John Williams.

“Short week, but it's all about the Fed,” financial commentary outlet The Kobeissi Letter summarized on X, along with the key dates for the upcoming days.

It noted that Fed policy remains “still far from clear” leading up to the rates decision.

Bitcoin has shown a marked decrease in sensitivity to Fed remarks over the summer, with even comments from Fed Chair Jerome Powell failing to significantly influence BTC price movements.

Nonetheless, the language used by officials can still alter market expectations regarding the Fed’s approach to inflation.

As of this writing, data from CME Group’s FedWatch Tool indicated that markets overwhelmingly anticipated — with 93% certainty — that rates would remain unchanged in September.

Fed target rate probabilities chart. Source: CME Group

Difficulty declines from all-time highs

Following a surge to new all-time highs two weeks ago, Bitcoin mining difficulty is beginning to stabilize.

In a modest adjustment, difficulty is projected to decrease by approximately 2.4% at its next automated recalibration on Sep. 5.

This is not unusual by historical standards, particularly considering the 6.5% rise observed in mid-August — a boost that occurred despite BTC price movements trending downward.

Bitcoin network fundamentals overview (screenshot). Source: BTC.com

Examining the potential reasons, James Straten, research and data analyst at crypto insights firm CryptoSlate, highlighted a concurrent decline in Bitcoin miners’ BTC reserves.

“This has coincided with miner balance decreasing by about 4k BTC, primarily coming from F2Pool that has seen its BTC balance cut in half,” part of weekend commentary on X noted.

Straten warned that any further decline in BTC price performance could lead to increased stress for miners, exacerbating the trend at F2Pool.

“If bitcoin was to experience another drop down we could likely see another miner capitulation,” he cautioned.

In response, IT Tech, a contributor to on-chain analytics platform CryptoQuant, pointed out a correlation between “minor” BTC price declines and miners transferring BTC to exchanges.

“This action, of course, increased the selling pressure, eventually leading them to sell on the market,” an excerpt from recent comments indicated.

IT Tech characterized the BTC sales as modest in scale but occurring “in the worst moments.”

Dormant BTC supply reaches new heights

Behind the scenes, Bitcoin’s supply is increasingly becoming the domain of long-term holders.

The latest figures from on-chain analytics firm Glassnode reveal several new records regarding BTC that has been locked away for extended periods.

The proportion of the currently mined supply that has remained dormant for three years or more has now reached 40.538% — the highest level recorded.

The equivalent metric for coins that have been stationary in wallets for at least five years now stands at 29.637% — also a new record.

BTC supply last active five years ago or longer chart. Source: Glassnode/X

Supply constriction is a positive development for Bitcoin bulls, who deduce that any future demand for BTC will lead buyers to compete for a reduced supply.

In recent analysis, Straten also observed that Bitcoin speculators, often referred to as short-term holders, had already distributed BTC to the market.

“Once again, bitcoin short term holders have capitulated roughly 20k BTC sent to exchanges at a loss,” he noted over the weekend.

“Fourth highest amount this year. This will continue to add to the record divergence between long term holder and short term holder supply.”

Bitcoin transfer volume from short-term holders at a loss annotated chart. Source: James Straten/X

Accompanying Glassnode data illustrated the volume of BTC transferred by short-term holders to exchanges at a loss.

Interest reverts to 2020 levels

This year, Bitcoin is not a prominent topic of conversation among the average non-crypto consumer, as evidenced by Google Trends data.

Related: Bitcoin metric with ‘100% long hit rate’ predicts $23K BTC price floor

Normalized search interest has returned to levels observed prior to BTC/USD surpassing its previous all-time high of $20,000 in late 2020.

Search activity is closely tied to BTC price movements, and the absence of significant upward events during Q2 seems to have contributed to stagnant mainstream interest.

Google search data for "Bitcoin" (screenshot). Source: Google Trends

Within the crypto space, the average investor is currently experiencing apprehension.

According to the sentiment gauge, the Crypto Fear & Greed Index, “fear” is the prevailing sentiment in the overall market.

At 40/100, the Index has remained in a range familiar since mid-August, when Bitcoin experienced a 10% decline.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

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.