Bitcoin (BTC) has recently seemed ready for substantial upward momentum, but has undergone a significant price correction. After reaching a two-month peak of $66,500 last Friday, the cryptocurrency has retraced about 6% over the past week, dropping to nearly $60,000 by Thursday.
Essential Buy Zones for Bitcoin
The expected bullish trend for Bitcoin was initially driven by improved economic conditions, particularly following the US Federal Reserve’s decision to reduce interest rates on September 18.
However, rising geopolitical tensions in the Middle East have altered investor sentiment, leading many to turn to traditional safe-haven assets such as gold.
Additionally, worries about the macroeconomic environment have grown, especially after Fed Chair Jerome Powell indicated that further rate cuts of 0.50% could be on the horizon in the coming months.
These combined factors have triggered a larger market sell-off, with Bitcoin, Ethereum, and other leading cryptocurrencies facing significant liquidity outflows estimated to approach $300 million, evident in the total crypto market capitalization.
Despite the recent downturn, crypto analyst VirtualBacon shared a more positive perspective on social media, highlighting that Bitcoin has returned to the “Bull Market Support Band.”
The analyst notes that this support band has traditionally provided a buffer during corrections between the current market prices and the $62,500 level on the weekly chart.
VirtualBacon pointed out that a weekly close above $58,000 could indicate a healthy correction, paving the way for a rebound. In contrast, a drop below this level would require a reassessment of bullish strategies.
The analyst identified two significant buy zones: $62,500 and a lower range between $58,800 and $60,000. These zones align with previous highs and correspond to the 200-Day Exponential Moving Average (EMA), a key long-term support indicator for any bullish market.
The 200-Day EMA, currently around the $60,000 threshold, has proven crucial over the last six months, acting as both support and resistance during various phases of Bitcoin’s price fluctuations in March, May, and July of this year.
Impending September Jobs Report
In his analysis, VirtualBacon stated that if Bitcoin rebounds from $60,000, it would showcase market strength. However, a daily close below $58,000—or a weekly close below that threshold—could indicate a possible bearish trend reversal.
VirtualBacon proposed a strategy to take advantage of the current dip, expressing intent to accumulate BTC within the $58,000 to $60,000 price range, which he considers a high-risk, high-reward zone. However, he warned that a close below $57,000 would serve as a significant warning sign.
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According to the analyst, as long as Bitcoin remains above $58,000, there’s potential for a higher low, setting the stage for a new peak above $66,000. However, macroeconomic factors will play a critical role in shaping market sentiment.
The upcoming release of the September jobs report will be especially significant, offering insights into the current unemployment rate, which could impact Bitcoin price movements, as per the analyst:
- 4.2%: Extremely bullish for the market.
- 4.3%: Neutral outlook.
- 4.4%: Caution advised.
- 4.5% and above: Bearish implications.
During the last Federal Open Market Committee (FOMC) meeting, Jerome Powell identified 4.4% as a crucial threshold. If the unemployment rate surpasses this level, VirtualBacon believes it could indicate trouble for the broader economic environment.
Featured image from DALL-E, chart from TradingView.com
