- Bitcoin is currently on an upward trend, influenced by the positive US Composite PMI Index.
- Derivative market data tracking platform, Coinglass, reports that liquidated short positions have significantly surpassed long positions following the recovery.
- Despite the recent recovery, the Federal Reserve’s interest decision in September and other economic indicators continue to pose a risk for Bitcoin and other altcoins.
Bitcoin is currently on a recovery path, following a significant drop to $25,000 after a prolonged period of low volatility within the $29,000 support and $30,000 resistance range. The cryptocurrency king is attempting to compensate for losses stemming from last week’s leverage reduction event, with a 1.64% increase in the last 24 hours, currently trading at $26,465.
The US Composite PMI Index Triggered the Recent Rise in BTC
Bitcoin bulls have successfully defended the $25,000 support level, preventing a potential drop to $20,000. This defense has resulted in a bullish outlook, allowing BTC to surpass the $26,000 resistance. The significant drop in price to $25,000 led the Relative Strength Index (RSI) to enter the oversold zone, which could serve as a catalyst for investors waiting for an opportunity to enter BTC. Furthermore, the largest cryptocurrency is believed to be following the upward trend in the US stock market. The S&P 500 and Nasdaq Composite index both rose by 1% in the trading session on August 23.
The rise on Wall Street came after the release of S&P Global’s flash US Composite PMI Index, used to measure economic activity in the manufacturing and service sectors. The data showed that economic expansion was on the verge of stalling in August. Investors are optimistic that the slowdown in consumer spending could halt the Federal Reserve’s interest rate hikes, which is promising news for the cryptocurrency market, as reflected in today’s price increases.
Derivative market data tracking platform, Coinglass, reported that a total of $37.7 million was liquidated in Bitcoin on August 23, with the rise. Of this liquidation total, long positions accounted for $9.64 million. For the first time since last week, the size of liquidated short positions in Bitcoin has surpassed long positions. Experts view this as a positive signal of increased market sensitivity.
Despite Bitcoin’s Price Recovery, Challenges Persist
At present, Bitcoin’s daily price chart is in the process of completing a second consecutive bullish candle. Amid this process, Bitcoin’s reduction of seller density at $26,800 will be the last hurdle before the expected rise to $30,000, with $28,000 being the next stop.
At this point, long-term investors in Bitcoin may want to wait until the Moving Average Convergence (MACD) indicator gives a buying signal. This call to buy BTC will be quite significant, considering the last buying signal on the daily price chart was around mid-June. As the RSI returns from the oversold area below 30 to the neutral area and finally to the overbought area above 70, the bullish situation will emerge.
As September approaches and the Fed is expected to announce its next interest decision based on developments in economic policy, investors must tread carefully. The latest FOMC minutes revealed that members are in favor of further interest rate hikes to reduce inflation in the US. Another interest rate hike by the Fed could depress risky assets like Bitcoin and altcoins, prolonging the recovery process.
Conclusion
While Bitcoin is showing signs of recovery, investors should remain cautious due to potential economic indicators and the upcoming Federal Reserve’s interest decision in September. The recent rise in Bitcoin has been largely attributed to the positive US Composite PMI Index, however, the ongoing challenges in the market indicate that this recovery may be temporary.
