Bitcoin (BTC) recently appeared poised for significant upside momentum and has experienced a notable price correction. Following a two-month high of $66,500 last Friday, the cryptocurrency retraced approximately 6% in the past week to around $60,000 by Thursday.
Key Buy Zones For Bitcoin
The anticipated bullish trend for Bitcoin was initially fueled by easing economic conditions, particularly following the US Federal Reserve’s decision to cut interest rates on September 18.
However, escalating geopolitical tensions in the Middle East have shifted investor sentiment, prompting many to seek refuge in traditional safe-haven assets like gold.
Additionally, concerns regarding the macroeconomic landscape have intensified, particularly after Fed Chair Jerome Powell suggested the possibility of further rate cuts of 0.50% in the months ahead.
This confluence of factors has led to a broader market sell-off, with Bitcoin, Ethereum and the top cryptocurrencies on the market experiencing substantial liquidity outflows estimated at nearly $300 million, as reflected in the total crypto market capitalization.
Despite the recent decline, crypto analyst VirtualBacon provided a more optimistic outlook on social media, noting that Bitcoin has returned to the “Bull Market Support Band.”
The analyst highlights that this support band has historically provided a cushion during corrections between the current market prices and the $62,500 mark on the weekly timeframe.
VirtualBacon emphasized that a weekly close above $58,000 could indicate a healthy correction, setting the stage for a resurgence. Conversely, a break below this threshold would necessitate reevaluating bullish strategies.
The analyst pointed to two key buy zones: $62,500 and a lower range between $58,800 and $60,000. These zones coincide with previous highs and align with the 200-Day Exponential Moving Average (EMA), a significant long-term support level for any bull market.
The 200-Day EMA, currently around the $60,000 mark, has been pivotal over the past six months. It has acted as support and resistance during various phases of Bitcoin’s price movements in March, May and July of this year.
September Jobs Report Looms Large
In his analysis, VirtualBacon explained that if Bitcoin bounces back from $60,000, it would signal strength in the market. However, a daily close below $58,000 – or a weekly close below that level – could signal a potential bearish trend reversal.
VirtualBacon outlined a strategy for capitalizing on the current dip, indicating a willingness to accumulate BTC in the $58,000 to $60,000 range, which he views as a high-risk, high-reward zone. Nonetheless, he cautioned that a close below $57,000 would be a significant red flag.
For the analyst, as long as Bitcoin holds above $58,000, there is potential for a higher low, setting the stage for a new price peak above $66,000. However, macroeconomic factors will remain crucial in shaping market sentiment.
This week’s release of the September jobs report will be particularly significant, as it will provide insights into the current unemployment rate, which could influence future Bitcoin price movements, according to the analyst:
- 4.2%: Very bullish for the market.
- 4.3%: Neutral outlook.
- 4.4%: Caution advised.
- 4.5% and above: Bearish implications.
At the last Federal Open Market Committee (FOMC) meeting, Jerome Powell identified 4.4% as a critical threshold. Should the unemployment rate rise above this level, VirtualBacon believes it could signal trouble for the broader economic landscape.
Featured image from DALL-E, chart from TradingView.com