The Bitcoin (BTC) price has surpassed $62,000 for the first time since August 1, after Federal Reserve Chairman Jerome Powell gave a dovish speech on the possibility of a rate cut in September.
Since its 6% rally on August 23, BTC has retested $65,000 twice but failed to show any bullish signs on the 1-hour and 4-hour charts.
While the sideways consolidation following the bullish breakout is seen as positive, other signals suggest that Bitcoin could undergo another correction towards the $62,000-$60,000 range.
Bitcoin exchange holdings flatten
As Bitcoin regained ground above the $61,700 resistance level for the first time in August, the market expected a surge of buying pressure.
However, according to data from CryptoQuant, Bitcoin exchange holdings actually increased by around 2,000 BTC last week.
Bitcoin exchange reserves. Source: CryptoQuant
While the overall downtrend in cryptocurrency exchange holdings continues, additional BTC inflows over the past week could potentially create additional buying pressure before the end of the month.
Below BTC liquidity clusters
As BTC recently rose to $65,000, there were over $140 million in short liquidations on August 23rd, and another $52 million on August 24th. The yellow band on the chart shows the liquidations clearing from $65,000, which is also evident in the long wick formed on the 4-hour chart.
Bitcoin Liquidation Heatmap. Source: Coinglass
BTC price is currently moving towards a surge in long position liquidity, with a potential $300 million+ long liquidation between $63,000 and $60,000.
Material Indicators, a transaction data provider registered with X.com,
FireCharts shows Bitcoin bid liquidity dropping to 62.5k. Such moves tend to push prices down. They also tend to attract late shorts. Watch your positions carefully and resist the urge to trade too much. Expect volatility until the end of the month.
These two liquidity clusters are causing the current volatility in the BTC market, and Bitcoin is likely to clear the lower liquidity bands first before resuming its uptrend.
The long/short ratio remains below 1.
Short traders, who form the majority of the futures contracts, have further strengthened the possibility of long liquidation. The long/short ratio for BTC is currently at 0.95, while 51.06% are short traders.
Bitcoin long/short ratio chart. Source: Coinglass
Although Bitcoin bounced 10% last week, short sellers’ positions remained intact throughout August, which is likely to keep prices subdued throughout the month.
Bitcoin August Average ROI is Historically Low
Bitcoin’s Q3 returns are historically lower than all other quarters, and the difference is huge.
Over the past 10 years, the return on investment (ROI) in the first, second, and fourth quarters was 56%, 27%, and 88%, respectively, but the ROI in the third quarter was only 6%.
Bitcoin monthly returns since 2013. Source: Coinglass
When looking at the returns by month, the average ROI in August and September is the lowest compared to other months, with September being the lowest at -4.78%. The average ROI in August is currently 2.34%, slightly higher than June’s -0.35%.
So, if Bitcoin suddenly spikes in late August, it would be against the historical trend, but given the seasonality of the market and the factors mentioned above, this is unlikely.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.