Uptrend breakdown limits Bitcoin’s potential to recover

In line with the previous forecast, Bitcoin prices broke below the medium-term uptrend line, with a simultaneous crossover of the 20-day and 50-day simple moving averages (SMAs). This worsened market sentiment further. The major cryptocurrency pulled back from its historical high set in August by more than 13% before establishing support at the level of $107,500. Bitcoin attempted to resume its growth in early fall, but the move was limited to the range of $112,000–$113,000.

Technical indicators point to weaker buying momentum in BTCUSD. On the daily RSI chart, a bearish divergence has been present for the past two months. Meanwhile, the Stochastic Oscillator shows that last week’s rebound is complete. The price is also being pressured by the SMA20. Bitcoin has failed to consolidate above this level for several consecutive trading sessions. However, even if the cryptocurrency climbs above this line, sellers could seize the initiative closer to the SMA50, which is now just below $115,000.

Unlike gold and US stocks, Bitcoin showed little reaction to rising expectations of a potential interest rate cut by the Fed. BTC ETFs saw inflows of almost $250 million last week, but this is still significantly lower than the figures recorded in June and July. Skyrocketing gold and the S&P 500 index look more appealing to market players than the cryptocurrency that has lost its strong upward momentum.

Bitcoin’s weakness may be triggered by the shrinking investment portfolios of its major holders, or the so-called “whales”. Over the past month, traders with 1,000–10,000 coins sold BTCUSD, totaling $12.7 billion. This is the highest volume since July 2022. That said, the current pullback of 13% from the local top is still far behind previous corrections. Bitcoin dropped 30% between February and early April, and it may be too early to buy back the drawdown.

Consider the following trading strategy:

Sell BTCUSD at the current price, with Take profit at $107,500 and Stop loss at $116,000.