On August 22nd, Bitcoin exhibited a noteworthy departure from prevailing trends, as it gravitated towards the $26,000 mark, capturing the attention of intraday BTC price movements.
Despite being in a state of significant overselling, as indicated by the relative strength index (RSI), Bitcoin displayed an unyielding resistance to staging any form of recovery rebound from its levels last observed two months earlier.
Market participants grew increasingly restless, with prominent trader Jelle characterizing the intraday fluctuations as the ominous “death chop.”
Monitoring entity Material Indicators likened the current scenario to a high-stakes game of chicken, anticipating a decisive move that would break the ongoing choppy pattern.
A comprehensive analysis of liquidity within the Binance BTC/USD order book conducted by Material Indicators unveiled a general paucity of liquidity, thereby intensifying the potential for a sharp and abrupt price shift in either direction.
The entity elaborated on the prevailing situation on X (formerly Twitter), stating, “The market is in a state of anticipation, gauging whether greater bid or ask liquidity will be drawn towards this range.”
Despite observing minor increments of bid liquidity moving from the $20,000 threshold towards the active trading zone, no substantial liquidity – either freshly introduced or relocated – was found to be fortifying the range against a potential dip to a lower low (LL).
The implications were considerable, particularly for bullish sentiments, as a LL could jeopardize even the foundational support at $20,000.
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Material Indicators underscored that the outcome would be of paramount significance, potentially driving BTC to levels below $20,000 if two consecutive LLs were to materialize.
On a more optimistic note, there remained a glimmer of hope that Bitcoin could reclaim its broader upward trajectory.
Michaël van de Poppe, the founder and CEO of Eight, a trading firm, emphasized the heavily oversold signals emanating from the RSI in a dedicated YouTube update on August 22nd.
Highlighting RSI measurements of under 19 on 12-hour timeframes, which were comparable to levels during the 2018 bear market nadir, and analogous daily measurements, which mirrored the lows witnessed during the March 2020 COVID-19 market crash, van de Poppe inferred that such downturns often precipitate a V-shaped recovery, culminating in equilibrium at a higher floor.
Anticipating a resurgence targeting $26,500 or beyond, van de Poppe articulated a distinct possibility of Bitcoin mirroring a trajectory akin to the prelude of the previous bull market.
Drawing parallels with the market dynamics of September 2020, Jelle alluded to a gradual ascent and absorption, echoing a pattern that could potentially unfold in the current scenario, thereby fostering an environment reminiscent of the commencement of the prior bull market.
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