Bitcoin Price Forecast

Today’s market analysis on behalf of Rania Gule Senior Market Analyst at XS.com

Bitcoin (BTC) has experienced a significant drop recently, starting Monday’s trading at $54,788. It fell below the $55,000 level on Friday following the release of the August Non-Farm Payroll report, which showed the unemployment rate declining to 4.2% as expected, highlighting the tensions facing global financial markets. I believe that as we approach the Federal Reserve meeting later this month, these pressures may continue to impact risk assets like Bitcoin.

The cryptocurrency market also saw a sharp decline, with the total market capitalization dropping below the critical $2 trillion level, which has been a strong support since May. Given these pressures, I see a risk that the horizontal corrective pattern could turn into a downward trend if the market continues to fall toward the $1.85 trillion level, a crucial pivot point for determining the market’s future direction.

In my opinion, this indicates that Bitcoin has been affected by external pressures from traditional financial markets, as the decline in key indicators like the jobs report weakens confidence in risk assets. If these factors persist, we may see further declines in the market unless there is a significant change in financial or economic policies.

Despite the pressure Bitcoin faced throughout the week, there is still strong technical support at the $54,000 level. However, increased volatility could break this support, pushing the price down below $53,000. As a result, I anticipate that the markets could witness a deeper correction if this scenario continues, especially with the anticipation of the upcoming Federal Reserve meeting.

I believe the recent pullback shows that Bitcoin may need positive catalysts, such as lower interest rates or an improvement in economic conditions, to maintain its current levels. Otherwise, any increase in volatility or additional pressures could push prices lower.

Data from CryptoQuant indicates that the number of active wallets on the Bitcoin network has fallen to its lowest level in three years, which is another negative signal for the markets. In my view, this decline in activity is a warning sign that there is a potential for further price declines. New investors pose a significant risk to the market, as they have incurred heavy losses, which could lead them to liquidate their positions if the decline continues.

In my opinion, this suggests that the market could see additional selling pressure from new investors if market conditions do not improve soon. I expect this factor to impact overall liquidity and further exacerbate the downward pressure on prices.

Alongside Bitcoin’s drop, many other cryptocurrencies have also been affected, including Ethereum, which has fallen 44% against Bitcoin since the shift to the Proof-of-Stake model. Similarly, the cryptocurrency mining sector has seen a decline in revenues, adding additional pressure on the market.

From my perspective, this downward trend shows that markets are under pressure from multiple directions, making it difficult for Bitcoin to recover shortly. Factors such as declining mining revenues and underperformance in other cryptocurrencies suggest that Bitcoin may face further downward pressure if this trend continues.

Therefore, I believe the market remains in a state of uncertainty, with anticipation surrounding the Federal Reserve meeting and the effects of the recent jobs report. With selling pressure from new investors, reduced activity on the Bitcoin network, and challenges in the mining sector, it seems that Bitcoin may struggle to regain its upward momentum easily. While there is technical support at the $54,000 level, continued economic pressures could lead to further declines, making it difficult for Bitcoin to overcome the risk-averse sentiment in the medium to long term, though not impossible.