Throughout the September month, Bitcoin’s journey has not disappointed in a show of volatility and consolidation, causing those involved in the crypto ecosystem to be anxious. After a rocky start to the month, the world’s largest digital asset has settled in around the $115,000 level. The recent price action, alongside important on-chain data, indicates there may be an inflection point, implemented Bitcoin’s retest of its all-time high.
Declining Sell Pressure and Scarcity Signal
One of the driving reasons for the increased optimism, is the recent noticeable decrease in sell pressure. Per crypto analyst Ali Martinez, the Bitcoin Sell-Side Risk Ratio has fallen below 0.1 percent. This metric is important because it has signaled a market bottom historically, which has now transitioned into an accumulation phase, where investors are more interested in buying and holding than selling.
This feeling is bolstered by an abrupt surge in the Bitcoin Scarcity Index on the Binance exchange, as detailed by crypto expert Arab Chain. A spike in the index occurs when the available supply of Bitcoin on exchanges falls due to either large investors pulling their holding off the exchanges, or due to a decline in sell orders. The last time the index had a similar spike in June, Bitcoin’s price rose to the area of $124,000 establishing a precedent for an upward move.
A Look at the Technical Indicators
From the technical perspective, Bitcoin’s daily chart reflects consolidation with an underlying sign of strength. The price is trading just underneath significant resistance at approximately $117,525. While some short-term momentum indicators (particularly the Commodity Channel Index and Stochastic RSI gauge) show that the asset is nearing overbought levels and may be due for a small, short-term retracement, the technical setup remains bullish.
Currently, the Momentum indicator and MACD are both showing buy signals for a bullish short-term outlook, and Bitcoin trades well above its 50-day, 100-day and 200-day moving averages. The alignment of long-term moving averages is also a significant indicator of sustained momentum and market behavior that is both healthy and upward moving.
Spot ETF Inflows Fueling Demand
In addition to the on-chain and technical data, institutional interest is still incredibly important. Data published by analysts at professional on-chain data analytics firm Glassnode shows net inflows to U.S. spot Bitcoin ETFs are significant, with the day showing the largest daily inflow since mid-July, occurring on one day in September. This new demand from buying entities in the institutional segment that are using the ETFs to gain Bitcoin exposure is an essential propellant for further price appreciation. The accumulation from treasury positions in corporation environments, plus the accumulation from spot ETFs, shows that the large majority of this market is being held for long periods, and does not serve the circulating supply into public trade.
The Road Ahead: Challenges and Opportunities
Despite generally favorable indications, there are obstacles ahead. First, the Federal Reserve’s pending interest rate decision will be a significant event on the calendar; if this meeting does not go well, it could cause volatility in the market. Second, there is a formidable resistance level at between $116,963 and $117,525. Bitcoin’s upward advance will require a decisive break through that level.
If there is a breakout, many believe that Bitcoin could quickly re-test prior all-time highs at $124,128. If there is no breakout, the price may see a re-test at the support level of $112,244, and possibly even lower at $106,963. The next few weeks will be crucial in determining the next important move for Bitcoin, as changing market dynamics, technical strength, and institutional demand will possibly provide the right context.
