Bitcoin price lacks buying power, once fell to $46,000 zone but now has recovered a bit

By Selena On Sep 20, 2021

BTC’s lack of integration with traditional finance and its inability to be sold heavily to cover financial losses means that prices do not crash if there is a global stock market crash. However, the bearish momentum over the past day could be another proof that BTC buying is relatively weak. At the time of writing, Bitcoin price is changing hands at $46,918.

BTC/USD 4-hour chart | Source: TradingView

Bitcoin price is struggling to flip $48,000 to support

One of the reasons behind the volatility of BTC, the significant price swings that occur frequently, is the difference in its use cases. Some experts consider it digital gold, a truly scarce store of value. Others see Bitcoin as a technology project or a type of software with a corresponding network.

As Bitcoin narratives change over time, so does BTC’s correlation with traditional assets. For example, there have been periods that have maintained a strong correlation with gold.

The March 2020 volatility has been horrifying for almost any asset class, but the recovery pattern over those six or seven months is virtually identical for gold and Bitcoin. Curiously, the opposite movement occurred in 2021, showing a negative correlation between the two assets.

Bitcoin vs. gold (precious metal) in 2020 | Source: TradingView

This shift in investor sentiment – from a comparison with the price of gold to tech stocks – raises the question of whether Bitcoin will withstand the downward volatility. If so, will Bitcoin continue to act as a safe haven amid a general correction?

In addition, BTC inherently has advantages over traditional markets such as commercial real estate, stocks, and bonds. Lenders will foreclose on these assets if the customer defaults, which puts additional pressure on them as the bank or institution has no interest in holding them. On the other hand, in general, Bitcoin and cryptocurrencies cannot be used as collateral.

However, according to crypto analyst EXCAVO, for the mid-term (1 – 3 months), Bitcoin price will move in the descending channel. BTC/USD had reached the premium zone by Fibonacci for bears and felt impulsively by 20%.

“Following my global vision, which you can see in the previous publication, I assume a planned decline to 39-40K in the short term(till one month). Then there will probably be some rebound. Stay tuned for future updates”, he stated.

Source: EXCAVO

Meanwhile, BTC Number of Spent Outputs with Lifespan 5y-7y (7d MA) just reached a 1-month low of 21.381. A previous 1-month low of 21.595 was observed on 13 September 2021.

Source: Glassnode

At press time, Bitcoin is witnessing a tough tussle between the bulls and the bears near the 20-day exponential moving average ($47,362). Although the price rebounded off this support on Sept. 18, the bulls could not sustain the higher levels.

The altcoin market today is also down nearly 5% from the BTC drop. Among them are XRP and ADA. Also, the Ethereum ETH Number of Exchange Withdrawals (7d MA) just reached a 1-month low of 1,257.083.

Source: Glassnode

The overall cryptocurrency market cap now stands at $2.078 trillion, and Bitcoin Dominance is 42.6%.

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