Despite the excitement surrounding Grayscale’s legal victory, Bitcoin is struggling to gather genuine buying interest, and analysts remain cautious about its price movement.
Following the Wall Street open on August 30, Bitcoin’s price drifted towards $27,000, settling after Grayscale, a digital asset manager, secured a positive verdict against US regulators, leading to a 7.5% gain. The price hit $28,143 on Bitstamp, its highest point in nearly two weeks, before consolidating lower.
Although Bitcoin’s daily candle closed above two crucial moving averages, these levels were not yet established as definitive intraday supports, prompting caution among analysts.
A contributor named “MAC_D” in an on-chain analytics platform CryptoQuant’s Quicktake post highlighted that the Grayscale-driven move originated on derivatives exchanges. Despite neutral funding rates, there was a notable absence of substantial buyer interest on spot markets.
MAC_D wrote:
“First, looking at the ‘Funding Rate,’ it is not an extreme value, so it is not expected to cause a sharp price correction. However, it is difficult to see that the spot exchange led the price increase when the BTC price rose yesterday. The reason is that the ‘Trading Volume Ratio (Spot VS. Derivative)’ shows that it has decreased rather than increased.”
Additional data indicated that trading volumes were lower than those witnessed during previous upticks earlier in 2023.
While acknowledging that even small trading volumes can lead to significant price changes due to decreased overall liquidity in the crypto market, MAC_D stressed the need for caution regarding the sustainability of the rally.
Rekt Capital, a renowned trader and analyst, held a similarly conservative view on the long-term outlook. In a recent YouTube update, Rekt Capital suggested that the BTC/USD pair might be repeating a move resembling the one observed around its previous all-time high in 2021. While expecting no new BTC price peak at the moment, he pointed out that the recent tops around $31,000 on the weekly chart, followed by a breakdown, are reminiscent of Bitcoin’s behavior before the 2022 bear market.
Rekt Capital stated:
“We’re seeing many similarities between the double top of 2021 and what we’re seeing right now.”
Should these similarities continue, and if BTC/USD replicates a full fractal pattern, the support level at $26,000 could turn into resistance, leading to further downside movement.
Additionally, reports have highlighted a potential target for a BTC price bottom, with $23,000 emerging as an increasingly significant level. Rekt Capital also identified $23,000 as a key level in the context of the 2022 bear market’s bottoming structure, represented by an inverse head and shoulders pattern.
He concluded by noting that this could be the level from which a price rebound might occur.