Following a busy week for crypto, with the positive court ruling on Grayscale and the pushing back of crypto ETF decisions the crypto market looks primed to make a move lower.
This week I am going to make an argument for Limited Downside in Bitcoin, and the possibility of a solid buying opportunity below $25,000 coming up.
The market has its sights set on October as the next possible opportunity for ETF approval, leaving a large amount of time for Bitcoin to take a leg lower in the meantime.
In the most likely scenario, the upcoming U.S. CPI release and Fed meeting will not be positive events for Bitcoin and the crypto market.
Plus, I can't think of any positive catalysts besides the ETF's for Bitcoin in September.
Poor seasonality for BTC, a weakening global economy, rising energy prices, and hawkish rhetoric towards rates coming from many Fed members cast a shadow over the backdrop for crypto.
Traders also have to consider that Bitcoin miners may start to sell at current levels, given the ongoing rise in costs and downturn in their profitability, which is now at its lowest since December 2022.
One of the reasons I think the downside could be limited for BTC is BlackRock. BlackRock, the world’s largest asset manager and probably the leading contender for a Spot Bitcoin ETF, is trying to become a big player in Bitcoin mining.
The company has now made significant investments in four of the five largest Bitcoin miners. Additionally, BlackRock’s increase in holdings also boosted its influence in the Bitcoin Mining Council (BMC) - an American Bitcoin mining lobby group.
If they are major shareholders in these companies, plus if approved they are obviously launching the spot upcoming ETF, thus they would obviously like to keep the price of Bitcoin relatively stable, with limited downside.
An argument can be made that BlackRock is trying to become vertically integrated in the ecosystem, and possibly transforming BTC from a proof-of-work to a proof-of-stake.
This makes the case for limited downside even stronger, plus there is some on-chain and technical evidence of Limited Downside for BTC.
Before I provide the on-chain and technical evidence, I am going to add some caveats for Limited Downside.
These would be a major global economic recession including a major stock market crash, COVID-19 lockdown 2.0, or some unexpected crypto event.
Those things aside, Bitcoin has had some serious Daily Active Address Divergence since the beginning of the year that needs to be unwound around the $23,000 and $22,000 area, making a magnet area for a final drop and recovery.
Plus, $22,800 was a huge technical breakout spot for Bitcoin after the banking dramas of the spring, plus a major CME futures gap sits around this area.
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Also, consider the bottom weekly Ichimoku Cloud sits around $22,800, and we saw a rejection of the top of the cloud. Often we see a move to the bottom of the cloud once topside rejection happens.
Finally, the Super Trend indicator shows the weekly trend remains bullish while BTC holds above the $23,000 area.
