Bitcoin’s Potential Comeback and Market Dynamics in Late September

Bitcoin (BTC) is poised for a potential resurgence as we near the monthly and quarterly close. Recently, BTC’s price action has surprised many by pushing above $112,000 for the weekly close, prompting a competitive struggle between bulls and bears. Liquidity concerns have resurfaced, with warnings about a possible drop that could liquidate late long positions.

This week’s macro highlight is U.S. employment data as it continues to exert pressure on Federal Reserve Chair Jerome Powell. Meanwhile, gold has hit all-time highs to kick off the week, reigniting speculation that Bitcoin may finally follow suit. Onchain data indicates that while some speculators are panic-selling BTC at lower prices, long-term holders remain steadfast.

Bitcoin Bulls Fending Off Resistance at $112,000

Despite previous doubts, Bitcoin managed to close the weekly candle above a crucial price level. After momentarily threatening new September lows below $109,000, BTC/USD rebounded just in time to establish $112,000 as a support level. Data corroborated this price point during the week’s initial Asia trading session. Market participants are cautious, with many asserting the need for more evidence before declaring a full-fledged bull market.

Ted Pillows, a crypto investor, noted that the upward movement in BTC also mirrored a similar recovery in Ether (ETH), pointing out that a convincing rally would require a daily close above $113,500. Otherwise, he cautioned that BTC might revisit its recent lows. Trader Roman echoed this sentiment, suggesting that without a strong high-volume breakout, BTC’s price may continue to oscillate within a tight range.

Shifting Liquidity and Liquidation Concerns

The recent surge above $112,000 has prompted significant shifts in liquidity across exchange order books. Data indicated that price movements have squeezed late short positions, necessitating large players to adjust their liquidity around $113,000. In the last 24 hours, total crypto liquidations amounted to $350 million, with shorts accounting for $260 million. As liquidity acts as a significant indicator for future price movements, market commentators are eager to predict BTC’s next steps.

There is a prevailing market sentiment leaning toward a decline below $100,000, yet some traders are still optimistic about a recovery. Current analyses suggest that dropping below $107,000 could result in a substantial liquidation of long positions exceeding $5 billion, heightening caution among investors.

U.S. Jobs Data and Federal Reserve Pressures

This week, U.S. employment data and Federal Reserve commentary are significant focal points for traders in the crypto and risk asset markets. Various officials are expected to discuss the U.S. economic outlook amidst a growing divide regarding interest rate cuts. Traders are hopeful for cuts, which imply increased liquidity for risk assets, yet FOMC members remain undecided about the timing and extent.

President Donald Trump has publicly criticized Powell, calling for swift action, reflecting his frustration with perceived slow policy adjustments. In the backdrop, private and public employment data is expected to serve as a catalyst for market volatility.

Gold’s Continued Domination

The week has commenced positively for Bitcoin bulls, yet gold has captured attention, reaching a record high of over $3,800 per ounce as the U.S. dollar weakens. This trend continues to illustrate gold’s dominance over Bitcoin as a preferred hedge. Reflexivity Research noted a declining Bitcoin/Gold ratio, suggesting a market preference for gold recently.

Despite Bitcoin’s lagging performance, some advocates remain optimistic, asserting that Bitcoin’s price movement may eventually mirror gold’s trajectory following a delay due to differing market sensitivities to macroeconomic factors.

Panic Selling Among Short-Term Holders

Analysis indicates that Bitcoin investors are exhibiting classic market behavior. Short-term holders have begun selling off their holdings at a loss, while long-term holders remain resolute. An assessment from CryptoQuant highlighted that the current market dynamics mirror those seen before prior upward price movements.

In particular, the onchain data showcased a disparity between long-term and short-term holders, underscoring that newer investors are more affected by price volatility. CryptoQuant confirmed that while short-term holders have sold during this price dip, the conviction of long-term holders has remained steady, paving the way for potential future rebounds.

This overview of Bitcoin’s current market conditions provides no investment advice, and readers are encouraged to conduct their own research before making any financial decisions.