Bitcoin remains steady at current spot rates, as observed in the daily chart, yet the downtrend continues, with the price entrenched in a bearish breakout pattern. This scenario follows the significant drop on September 7, where the world’s most valuable cryptocurrency tumbled, approaching the critical $50,000 mark.
The technical outlook shows that the downtrend is still dominant, especially if bulls fail to recover the losses from September 7. Analyzing from an effort-versus-result perspective, the trend that began on this date seems poised to dictate short-term movements, likely pushing the price below the August lows. In the midst of this, an on-chain analyst points out a substantial accumulation of leveraged positions building up since March 2024. While it’s uncertain which direction the price will take, the current situation seems to favor sellers.
Interestingly, despite the overall downtrend, if the bulls manage to take control, it would provide a significant boost to Bitcoin’s sentiment, which has been heavily impacted by sharp losses over the past three months. Regardless of the eventual direction, this build-up in leveraged positions signals a period of heightened volatility in the near future.
As Bitcoin continues its downward trajectory, market sentiment has considerably dampened, as evidenced by the reduced trading volumes over the past two weeks. BTC has seen a nearly 20% drop from its late August value of around $66,000 to last week’s lows. The volatility remains relatively low, reminiscent of the period before BTC’s dramatic rise from late February to mid-March 2024, when it hit new all-time highs.
On a different note, despite the lower lows, data indicates that the average funding rate across derivatives exchanges has stayed bullish for over a year. This could be due to the positive shift in price action that began in late Q3 2023. During this recovery, BTC managed to shrug off its previous weakness and surged past $70,000, recovering from 2022’s low of $15,800.
For bulls to dominate the derivatives market convincingly, prices must steadily rise. A breakthrough above $66,000 and surpassing the July highs would likely spur demand and push the coin past the multi-month resistance at $72,000. However, for this bullish scenario to materialize, there must be significant inflows into spot Bitcoin ETFs. The recent price drop has led to accelerated outflows from these products, suggesting that institutions are treading cautiously. SosoValue reports that spot Bitcoin ETF issuers in the United States have faced outflows exceeding $169 million.
