TL;DR
Bitcoin’s recent downtrend could soon give way to a renewed rally due to emerging positive signals.On the other hand, some indicators suggest the market correction might not be over yet.Heading North Again?
Bitcoin experienced enhanced volatility in the past several weeks, with its price swinging in the $55,000-$65,000 range. In the last few days, the asset’s valuation dipped towards the downside mark, causing concerns that September might offer further pain for the bulls.
However, there are three important factors that could trigger a renewed rally. The first, and arguably the most important, is the potential pivot from the US Federal Reserve. America’s central bank is expected to lower the interest rates following its next FOMC meeting scheduled for September 18.
The effort will make money-borrowing cheaper, possibly boosting investors’ interest in risk-on assets such as BTC. Recall that the primary cryptocurrency witnessed a substantial price spike at the end of August when Jerome Powell (Chairman of the Federal Reserve) promised a rate cut.
Next on the list is the whale’s activity. As CryptoPotato reported, large BTC investors have been on a buying spree lately despite the price dips. Those holding between 100 BTC and 1,000 BTC now control over 20% of the asset’s circulating supply, equivalent to approximately $230 billion. Moreover, the number of Bitcoin wallets holding 100 BTC or more has reached 16,120, or a 17-month high.
Accumulating huge amounts of the asset leads to a reduction in the available supply on the market, which could be followed by a price increase (assuming demand doesn’t go down). Additionally, the rising number of BTC whales could be interpreted as a positive sign by smaller players, resulting in more capital entering the ecosystem.
Last but not least, we will touch upon the Bitcoin exchange netflow. In the past week, outflows have predominantly exceeded inflows, with two huge red candles observed on September 3 and September 6. This suggests a shift from centralized exchanges toward self-custody methods and could be considered bullish since it reduces the immediate selling pressure.
BTC Exchnage Netflow, Source: CryptoQuantThe Bearish Sign
Separately, one crucial factor hints that Bitcoin’s correction might stay longer. This is the selling spree of miners who sold more than 2,600 BTC over the weekend (according to crypto analyst Ali Martinez).
BTC Miners, Source: Ali ChartsMiners are among the largest holders of the asset. When they sell significant amounts of BTC, the circulating supply of BTC increases, which can push the price down if demand does not catch up with the pace.
Miners typically part with their holdings to cover operational costs (electricity, hardware maintenance, and more). If they sell more than usual, it might signal that their profit margins are shrinking, which could be interpreted as a sign of challenging market conditions.