Bitcoin (BTC) price analysis: Will the June lows be tested?

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Bitcoin could rise to $20,000 in the near term

Bitcoin (BTC) coins against a chart backdrop                                 
Investor sentiment turned down after the Federal Reserve showed it was firm on raising rates – Photo: Shutterstock
                                

Contents

The United States dollar index (DXY) soared to a new two-decade high above 110 on 6 September and this caused a sell-off in risky assets. Bitcoin plunged more than 5% and closed below $19,000 for the day. After a minor recovery on 7 September, the bulls are struggling to sustain Bitcoin’s price above $19,000 as of 9 September 2022.

The DXY is in a secular uptrend and it is usually inversely correlated with the US equities markets and the cryptocurrency markets. Unless the DXY turns down sharply, a sustained recovery in Bitcoin and altcoins looks unlikely.

Craig Erlam, senior market analyst for Oanda, seems wary of the recovery in Bitcoin. “The question now is whether we could see another spiral, as we so often have in the past, in the event that bitcoin breaks the summer lows around $17,500 to trade at late 2020 levels,” Erlam wrote in an email according to CoinDesk.

Another factor that may be driving investors away from Bitcoin is the upcoming Ethereum Merge. If the upgrade is successful, it is expected to reduce Ethereum’s energy consumption by more than 99%. That could shift the focus back to Bitcoin’s high energy consumption. 

Bitcoin has been losing ground to the altcoins this year and its dominance has decreased to 37.8% on 8 September, its lowest level since June 2018, according to CoinMarketCap data. In comparison, Ether’s market dominance at 20.3% remains strong and is just a tad below its yearly high of 21.66% hit on 10 December 2021.

Could buyers arrest Bitcoin’s decline? Will Bitcoin go up? Read our BTC price analysis to find out.

Bitcoin weekly chart
Bitcoin weekly chart. Credit: Currency.com


Bitcoin price technical analysis: Weekly chart

BTC’s price formed an inside-day candlestick pattern last week, which resolved to the downside with a break below $19,500. The bulls are currently attempting to start a rebound from the strong support at $18,500.

However, the downsloping 20-week exponential moving average (EMA) and the relative strength index (RSI) near the oversold territory indicate advantage to bears.

If buyers fail to push the price above $20,576, the BTC/USD pair could turn down and break below $18,500. If that happens, the pair could retest the June low of $17,574.60. This is an important support to keep an eye on because a break and close below it could signal a resumption of the downtrend.

Alternatively, if bulls push the price above $20,576, the pair could attempt a rally to the 20-week EMA. A break and close above this resistance could signal a potential trend change.

The Bitcoin price analysis shows that bulls are trying to defend the support at $18,500 but they may face stiff resistance at $20,576.

Bitcoin daily chart
Bitcoin daily chart. Credit: Currency.com


Bitcoin price technical analysis: Daily chart

BTC’s price turned down sharply on 6 September and broke below the support at $19,517.70. Though the bulls are attempting to defend the strong support near $18,500, the bounce lacks strength.

If the price turns down from the current level or the overhead resistance at the 20-day EMA, it will suggest that bears remain in command. That could increase the likelihood of a break below $18,500. The longer the price sustains below the 20-day EMA, the greater the possibility of a retest of $17,574.60.

Contrary to this assumption, if bulls push the price above the 20-day EMA, it will suggest that the bearish momentum could be weakening. That could open the doors for a rally to the 50-day simple moving average (SMA).

Bitcoin: Buy or sell at current levels?

Bitcoin’s price analysis shows that buyers are attempting to push the price back above $20,000 but they may face stiff resistance from the bears. If the price turns down from the current level or $20,000, the possibility of a break below $18,500 increases. The first sign of strength will be a break and close above the 20-day EMA. 

The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision. 

Further reading

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