Will Bitcoin Price Break Consolidation and Reset Crypto Market with $1 Billion Ahead of September?
In August 2023, the cryptocurrency market experienced significant volatility, leading to a massive liquidation of $1 billion over the past 48 hours. This sudden sell-off raised questions about the end of a prolonged consolidation period and the potential for a bullish market in the coming months. To understand the sentiment of the market for September, this research explores on-chain data and historical trends.
The $1 billion liquidation occurred on Thursday, August 17, following news of SpaceX selling Bitcoin, Evergrande’s bankruptcy filing, and interest fears. Bitcoin and Ethereum reached their lowest values at around $25,100 and $1,550, respectively. As a result, the global market capitalization dropped below $1 trillion, reaching a low of approximately $996.9 billion. However, there was a slight rebound following the SEC’s consideration of approving an Ethereum ETF.
As of now, the total market liquidation has surpassed $67 million, with heavy liquidation of short positions indicating that sellers are offloading their holdings. Since August 17, the total liquidation has exceeded $1.1 billion, affecting around 200,000 traders.
Analyzing the on-chain sentiment, Bitcoin’s Netflow dropped from 3,992 to -3,847 after the market sell-off. This negative netflow suggests a period of selling for Bitcoin’s price. Additionally, Bitcoin’s NUPL ratio (Net Unrealized Profit and Loss) declined from 0.29 to 0.22 after the price broke below $28.7K. This indicates that more coin owners are experiencing losses, reducing the motivation to sell at a loss and decreasing overall selling pressure.
Despite the market decline, long-term holders (holding for more than 155 days) remained stable in selling at a profit, as indicated by the long-term holder SOPR above level 1. Their faith in the long-term potential of Bitcoin helps stabilize the market during difficult times.
Looking ahead to September, historical trends show that this month has posed challenges for Bitcoin’s price movement. September 1st, in particular, has consistently shown year-over-year price growth, with the exception of 2022. If Bitcoin maintains its trading level of around $25,000 at the start of September 2023, it will have grown approximately 26% since September 1, 2022. However, considering the average year-over-year growth rate of 74% since 2017, Bitcoin’s price could exceed $34,452 on September 1, 2023.
Based on the current sentiment and buying momentum near the dip of $25K, a surge above immediate resistance levels is expected as Bitcoin is currently undervalued according to on-chain data. However, traders should conduct their own research as the market remains highly volatile in the short term.