Summary
- Bitcoin reached a low of $82,776.30 today and is currently valued at $83,178.54, reflecting a 2.76% decline, coinciding with oil prices rising above $101 and increasing bond yields.
- Despite a strong daily trend, technical indicators suggest that Bitcoin is nearing oversold conditions.
- Traders estimate a 67% chance that Bitcoin will hit $80,000 in October and a 55% probability for reaching $87,500.
Bitcoin experienced a challenging morning, starting the day at $85,543.66, dropping to $82,776.30, and now trading at $83,178.54. This significant decline raised concerns among traders, as it threatened to breach critical support levels.
The 3.2% decrease resulted in substantial liquidations for leveraged traders, with about $969 million in crypto positions being closed in the last 24 hours, including $644.47 million in long positions, according to CoinGlass.
Myriad: How low will Bitcoin go? Click to make your prediction.What triggered this movement, and what lies ahead? The answer involves broader market factors, not just the crypto space.
Market Overview: Stocks Retreat, Oil Prices Soar, Bond Yields Rise
Wall Street is retreating from record highs, with the S&P 500 dropping 0.59% to 7,772.60 and the Nasdaq falling 0.71% in early trading.
The primary driver is rising oil prices. Brent crude has surpassed $101 per barrel, while the 10-year Treasury yield approaches 5.34%, and the 30-year yield has reached 5.70%, the highest level since 2002. Even gold, typically a safe haven, fell by 1.53% to $4,123.10.
Oil prices are volatile due to an increase in attacks on ships in the Strait of Hormuz. The UK Maritime Trade Operations agency has reported at least one attack each day in the strait or the Gulf of Aden since October 2, as noted by Al Jazeera.
Recently, Iran's Revolutionary Guard instructed a tanker entering the strait to turn back or face an attack. Rising oil prices heighten inflation concerns, which in turn drive up yields and adversely impact risk assets like Bitcoin.
Bitcoin has previously reacted to oil price changes; for instance, in June, it dropped to $65,590 as Brent oil prices reached $96 amid Middle Eastern tensions. Currently, Bitcoin is trading approximately 40% above its value of around $59,500 from late June.
The Federal Reserve is also adding to market anxiety today with the release of minutes from its September 15-16 meeting.
Bitcoin Price Analysis: Daily Strength vs. Short-Term Weakness
The four-hour chart indicates that Bitcoin faced rejection near $86,978.45 before the recent decline. After dipping below $83,000, prices rebounded, providing some relief for traders.
Bitcoin price data. Image: TradingviewFibonacci retracement levels, which indicate potential price pauses based on previous movements, show that key resistance levels are at $83,768.01 and $84,877.38 following the recent drop.
The Relative Strength Index (RSI) for this four-hour timeframe is at 32.2, indicating that Bitcoin is oversold due to the rapid price drop. While this suggests bearish momentum in the short term, it also attracts bargain hunters looking for potential gains over the longer term.
Looking at the daily charts, the Average Directional Index (ADX) stands at 42.8, reflecting a strong bullish trend with buyers still outnumbering sellers. The daily RSI reads 52.5, indicating a neutral position, suggesting that the recent sell-off has not significantly impacted the overall bullish momentum.
Bitcoin price data. Image: TradingviewThe 50-day exponential moving average (EMA) remains above the 200-day EMA on both daily and four-hour charts, implying that the overall upward trend is intact. The daily squeeze remains in effect, with a momentum reading of 1.17 that is beginning to decline, indicating compressed volatility.
The daily low of $82,776.30 is just above the Fibonacci retracement level around $82,626.41.
As oil prices and yields increase, stocks, gold, and Bitcoin have all seen declines together, highlighting that this is not an isolated issue within the crypto market.
Overall, macroeconomic factors ignited this situation, while leveraged positions exacerbated the decline. Falling prices lead exchanges to liquidate leveraged positions that cannot cover losses, further driving prices down.
Myriad: How high will Bitcoin go? Click to make your prediction.Traders on Myriad, a prediction market developed by Decrypt’s parent company Dastan, are already anticipating further declines. Currently, the BTC lows in October market suggests a 92% likelihood that Bitcoin will reach $82,500 this month, a 67% chance for $80,000, and a 43% chance for $77,500.
On the upside, predictions are more conservative. The BTC highs in October market indicates a 55% chance of hitting $87,500 and a 36% chance for $90,000. Both markets are based on Binance price touches rather than closes, meaning both a drop and a subsequent rally could trigger a “yes” outcome within the same month.
Bulls need to reclaim $84,761.70, the upper limit of the four-hour trend band, and surpass the $84,877.38 retracement to confirm that the dip has concluded. If the $82,776.30 support fails, the next targets would be the four-hour band bottom at $81,567.49 and the daily 50% retracement at $81,165.95. Market participants should keep an eye on the Fed minutes and any new developments regarding Hormuz for potential catalysts.
Disclaimer
The opinions expressed herein are solely for informational purposes and do not represent financial, investment, or other forms of advice.