Bitcoin’s (BTC) price reclaimed a position above $62,000 for the first time since Aug. 1, after Federal Reserve chairman Jerome Powell delivered a dovish speech about potential rate cuts in September.
After a 6% uptick on Aug. 23, BTC went on to re-test $65,000 twice but failed to illustrate a position of bullish strength on the 1-hour and 4-hour chart.
While a sideways consolidation after a bullish breakout is considered positive, other signs indicate that Bitcoin may entertain another correction down to the $62,000-$60,000 range.
Bitcoin exchange reserves flatline
The market expected an influx of buying pressure as Bitcoin reclaimed a position above its overhead resistance at $61,700 for the first time in August.
However, data from CryptoQuant suggests that the Bitcoin exchange reserve actually increased by roughly 2,000 BTC over the past week.
Bitcoin exchange reserve. Source: CryptoQuant
Though the overall downtrend in cryptocurrency exchange reserves remains, the additional BTC inflows over the past week could present additional buy pressure before the end of the month.
BTC liquidity clusters below
BTC’s recent move to $65,000 led to short liquidations of over $140 million on Aug. 23 and another $52 million on Aug. 24. The yellow bands in the chart picture a liquidation sweep at $65,000, which was also evident by the long wicks formed on the 4-hourly chart.
Bitcoin liquidation heatmap. Source: Coinglass
BTC price is currently moving toward sweeping long-side liquidity, where over $300 million in long liquidations may take place between $63K and $60K.
Material Indicators, a trading data provider, noted on X.com,
FireCharts shows Bitcoin bid liquidity moving down to $62.5k. Moves like this tend to draw price downward. It also tends to lure in late shorts. Be mindful of your positions and resist the urge to overtrade. Expecting volatility through the monthly close.
These liquidity clusters on either side are causing BTC’s present choppy market, and Bitcoin can potentially clear out the liquidity bands below first before resuming the uptrend.
Long/Short ratio remains under 1
Short traders forming most of the futures contracts further strengthened the possibility of long liquidations. BTC’s long/short ratio is currently 0.95, whereas 51.06% are short traders.
Bitcoin Long/Short Ratio chart. Source: Coinglass
Last week, Bitcoin’s 10% rebound did not discourage the short traders’ positions, which have been maintained for most of August and should keep prices suppressed for the rest of the month.
Bitcoin’s August average ROI is historically low
Bitcoin’s Q3 returns are historically lower than every other quarter, and the difference is also pretty steep.
While Q1, Q2, and Q4 have averaged a return on investment (ROI) of 56%, 27%, and 88% over the past decade, Q3 has only managed a 6% ROI.
Bitcoin’s monthly returns since 2013. Source: Coinglass
When the returns are observed monthly, August and September averaged ROIs are among the lowest compared to other months, with September coming in at the bottom with -4.78%. August’s average ROI currently stands at 2.34%, just ahead of June’s -0.35%.
Hence, Bitcoin would buck the historical trend if it managed a sudden late August surge, but that’s unlikely given the market seasonality and the factors above.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.