Bitcoin’s price dropped a modest 1.75% on Sept. 8 to nearly $25,850, wiping out almost all the gains made just hours before.
Bitcoin price sees technical correction
Bitcoin’s (BTC) price has struggled for direction in September, fluctuating between small gains and losses amid decreasing liquidity.
Traders’ indecisiveness is primarily due to an ongoing spot Bitcoin exchange-traded fund delay and, as ARK Invest warned, the uncertainty regarding the Federal Reserve’s interest rate decision this month.
So, Bitcoin’s price has been trending inside a narrow trading area (the red zone in the chart below), defined by $26,450 as resistance and $25,550 as support. That has likely prompted traders to buy at support and sell at resistance.
The same strategy is likely behind the Sept. 8 sell-off, wherein a lack of buying momentum near the $26,450 resistance promoted the BTC/USD pair to pull back.
A bump in exchanges’ Bitcoin reserves
Furthermore, a minor bump in the exchanges’ BTC balance has likely also played a role in the price slide.
Notably, these Bitcoin reserves have increased from over 2.03 million to 2.05 million BTC so far in September. Simply put, the more BTC on exchanges, the more potential pressure on the market.
The duration of the Sept. 8 Bitcoin sell-off triggered a wave of long liquidations in the derivatives market.
Notably, the spot BTC price decline has caused $7.78 million of long liquidation so far on Sept. 8. In other words, traders were forced to sell their Bitcoin collateral to recover the borrowed amount, intensifying the market’s selling pressure.
Where is the BTC price heading next?
Technically, the Sept. 8 sell-off has pushed the Bitcoin price below its 50-period, four-hour exponential moving average (50-4H EMA), the red wave in the chart below.
This move increases BTC’s possibility of continuing its downtrend toward $25,550 in the coming days. This level coincides with a support confluence comprising a horizontal level (the lowest end of the red bar) and a descending trendline (black lines).
Related: Why is the crypto market down this week?
Conversely, reclaiming the 50-4H EMA as support can position BTC/USD to retest $26,000 for a potential breakout. In this case, the BTC price could rally toward the 200-4H EMA (the blue wave) near $26,975 in September.
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