Why is Bitcoin's price stagnating?
Bitcoin is currently range-bound ahead of key data releases in the U.S., with technical indicators suggesting a potential drop below $56,000.
As of October, the price has been trading within a range of about $4,000, consistently holding above the $60,000 support level while facing repeated pullbacks after attempts to break through the $64,000 resistance level.
Geopolitical risks suppress Bitcoin's rise
Due to economic uncertainty and geopolitical risks, Bitcoin's price is currently stagnating, creating a cautious market environment.
For instance, the market expects the Federal Reserve to cut rates by 25 basis points, particularly as it awaits the latest policy meeting minutes on October 9 and key inflation data on October 10.
Rate cuts are generally favorable for Bitcoin. However, escalating geopolitical conflicts in the Middle East have dampened risk sentiment, prompting investors to flock to safer assets like the U.S. dollar.
For example, the U.S. dollar index has risen to its highest level in nearly a month, especially during Bitcoin's consolidation in the $60,000-$64,000 range.
Low seller activity keeps Bitcoin's price stable
The ongoing range-bound movement of Bitcoin can also be traced back to the seller risk ratio indicator.
Notably, this indicator measures the total actual profits and losses relative to Bitcoin's market cap. A higher ratio indicates that investors are realizing more profit or loss when transferring their tokens compared to their initial investments.
Conversely, a lower ratio suggests that token prices are close to investors' break-even points, resulting in minimal realized profits or losses.
As of October 9, this ratio has dropped below the "low-value zone," indicating almost no profits or losses at the current price level. The lack of decisive action from investors shows that the market is stagnant, leading to Bitcoin's price stagnation.
Neutral momentum indicates conflicting trader biases
Bitcoin's sideways price action is occurring within an ascending wedge pattern, confirmed by a contracting upward trend line intersecting around the $69,750 peak.
Additionally, the Relative Strength Index (RSI) hovers near the neutral level of 50, indicating neither overbought nor oversold conditions. In other words, there is a balanced sentiment between buyers and sellers.
Ascending wedges typically end with bearish reversals. A breakdown occurs when the price falls below the lower trend line and descends to the maximum distance between the upper and lower trend lines of the wedge.
If the ascending wedge pattern is confirmed, Bitcoin's price could potentially drop to the $49,700-$56,000 range by the end of 2024.
