BTC price is struggling to hold $26k support as a further drop below $25k has become evident ahead of a possible interest rate hike in the US.
BTC price is not bearish as of the end of Asian trading hours on Tuesday, but it is not bullish either. After a failed attempt to break the resistance at $27,000 late last week, the largest crypto with $507 billion in market capitalization remains decisively at $26,000.
Another failed rally could confirm growing concerns in the market that Bitcoin may have to break below $30,000 before making a valid bid for higher gains above $30,000.
BTC Price Is Close To A Breakout
There are clear signs of a breakout in BTC price based on the four-hour chart. The Bollinger Bands indicator can be seen contracting – a phenomenon that often marks the period preceding a breakout.
The main fear is that the breakout could initiate a bearish plunge and the BTC price could drop below $25,000 before resuming the uptrend above $30,000.
![BTC price holds at $26,000](https://cdn.coingape.com/wp-content/uploads/2023/08/29103402/BTCUSD_2023-08-29_08-03-26.png)
Another downside move will become apparent if the BTC price breaks below the lower Bollinger Band boundary. Besides jeopardizing short-term support, such a move would put more pressure on the next buyer to rush to $25,000.
A sustained break below the crucial $25,000 level opens up the possibility of further losses toward $23,500, an area where many traders may look to invest in BTC anticipating a strong climb above $30,000.
That said, extended losses to $20,000 cannot be ruled out, especially as market watchers are already expecting another rate hike by the United States Federal Reserve. Fed Chairman Jerome Powell’s speech last week indicated another round of rate hikes was needed.
The regulator’s tighter stance on monetary policy depends on various economic indicators taking into account indices such as the Consumer Price Index (CPI), which suggested in August that inflation was still an issue.
In the event of another rate hike in September, bitcoin will struggle to hold above $25,000, thus increasing the chances of another selloff to $23,500 and, if pushed, to $20,000.
Exploring The Hidden Bullish Case In BTC Price
Despite the drop to $25,000 support nearly a couple of weeks ago, “larger volume holders show unwavering confidence,” IntoTheBlock, an on-chain analytics platform reports.
The positive flow of large holders indicates that there is still a significant amount of confidence among investors, despite the recent challenges in the market. This, coupled with the decrease in supply on exchanges, suggests that many investors are still bullish on Bitcoin and anticipate a recovery.
The Money Flow Index (MFI) is a key indicator to watch in this scenario. If the MFI maintains its uptrend above the midline, it could indicate that investors are still actively supporting the BTC price and betting on a rebound toward $30,000. This is because the MFI measures the inflow and outflow of money into the BTC markets, and an uptrend suggests more money is entering than leaving.
However, there are several hurdles that traders should be prepared for, including the 50-day, 100-day, and 200-day Exponential Moving Averages (EMAs) at $26,262, $26,876, and $27,724 respectively. These EMAs could act as resistance levels that the BTC price will need to overcome in order to continue its upward trajectory.
Overall, while there are certainly challenges ahead, the positive netflow of large holders and the current MFI trend suggest that there is still a strong level of support for Bitcoin, and a recovery toward $30,000 is within the realm of possibility.