Bitcoin saw another disappointing crash on Wednesday this week, after making another attempt at rising above the $12,000 mark and staying there. The leading digital currency plummeted to as low as $11,200, as sellers continued flooding the market.
According to some people, the news that Bithumb’s office was raided crashed the market. Bithumb is a leading cryptocurrency exchange based in South Korea.
Since then, BTC is yet to reach the $11,500 that is commanded by the end of its August Monthly candle. Nonetheless, analysts are optimistic as the asset’s long-term outlook remains strong.
Bitcoin Isn’t Entirely Bearish
In the wake of bitcoin’s strong correlation, one trader noted that BTC isn’t as bearish as it might look. Based on the chart shared by the trader to support his cautiously optimistic sentiment, BTC’s drop allowed it to create a low that’s relatively higher than its previous correlations seen in August. That suggests that bitcoin’s uptrend is intact.
While BTC plummeted further today from $11,200, this price remains a liquidity zone that might trigger an upward movement. Others are also continuing to express their optimism despite the drop, with one trader saying that BTC’s ongoing movement is only part of a consolidation range that might end at a higher price.
Bitcoin’s Bearish Scenario
Three main factors might contribute to the decline of Bitcoin’s price in September. First, September is historically a slow month for Bitcoin. Second, the USD is starting to recover at key support levels slowly. Additionally, it’s typical for BTC to consolidate after a major rally.
Before the rapid drop in Bitcoin’s price on Wednesday, 2nd September, long-time bulls were expecting a sharp pullback. That’s because Bitcoin’s price rose by almost 8% against the USD, while ether saw a sharper rally, surging 30%.
Bitcoin’s primary bearish scenario is a continuous decline past $11,000, which would be a rejection of the support level to join the $9,700 CME gap. However, Bitcoin will have to fall below the $11,000 support area for that to happen. Fortunately, this support area has served as a solid foundation in the recent rally.
According to a pseudonymous crypto trader Salsa Tekila, $10,500 might be the key support for a bullish trend. That’s considering that a lot of traders consider $10,500 to $11,000 as a vital support range. That’s because losing the support range might trigger a strong pullback.
All Eyes on Gold
The immediate future of BTC might be determined by gold’s price action, which is dictated by the US dollar relative to other currencies. Their relationship was evident on Wednesday, where Bitcoin’s price dropped, alongside that of gold. That confirms that a correlation between the two assets has been formed in recent months after becoming a prominent narrative on the media and social platforms.
With their correlation, gold might become a major driving force for Bitcoin rising again. The price of this precious metal is expected to start increasing, as monetary stimulus continues worldwide and continue pushing their capital to gold.