The week began with prevailing bearish pressure on Bitcoin, after the price registered a decline of more than 4% in recent hours, despite earlier optimism around a potential low-interest-rate environment. For now, the selling bias remains dominant, driven by profit-taking near historical highs and by the lack of a clear rebound in crypto market confidence indicators in the short term.
Is Confidence in Lower Rates Fading?
At the end of last week, Bitcoin managed a significant rally, briefly trading above $115,000 per BTC, supported by expectations of new interest rate cuts by the U.S. Federal Reserve. These expectations are already reflected in the Fed’s probability models: according to CME Group data, there is currently an 86.3% probability that at the next meeting on September 17, the U.S. interest rate will be reduced from the current 4.5% to a new level of 4.25%.
Source: CMEGroup
A lower rate environment in the U.S. gradually reduces the cost of debt for consumption and investment, which could incentivize flows into higher-risk assets such as Bitcoin. The initial price reaction reflected this dynamic, as capital could shift away from safe-haven assets and into cryptocurrencies in a context where several central banks, including the Fed, appear to be moving toward easing.
However, this outlook has also brought notable shifts in Bitcoin’s market dynamics. Open Interest in BTC futures rose significantly over the weekend, surpassing $43 billion, reflecting the entry of both long and short positions. The fact that the price fell while Open Interest increased suggests that many long positions were closed while new short positions have been consistently added to the market.
Source: Cryptoquant
This indicates that Friday’s rally may have triggered profit-taking or signaled potential overbought conditions in the short term. Despite the initial boost from Fed expectations, the simultaneous rise in Open Interest and decline in price raises the likelihood that selling pressure will continue to build in the sessions ahead.
Is Confidence Slipping?
Crypto market sentiment has also started to weaken. The Fear & Greed Index has retreated to the 50 level, indicating a highly neutral stance and confirming that confidence has been gradually eroding over the past several weeks, even as Bitcoin tried to hold near its highs.
Source: Coinmarketcap
A weaker confidence backdrop could prevent Bitcoin from consolidating above its historical highs. If the index falls into the “fear” zone, it is likely that the bearish bias will intensify further, pushing the market into a correction phase in the short term.
Bitcoin Technical Outlook
Source: StoneX, Tradingview
- A New Selling Bias Emerges: Since August 15, when Bitcoin broke its medium-term uptrend line, the price has been posting lower lows, currently testing key support levels such as the 50-period simple moving average. If these lows continue to repeat with strength, the selling bias could consolidate, leading to a stronger downtrend. Alternatively, if no clear direction emerges, Bitcoin could settle into a neutral sideways range in the coming sessions.
- RSI: continues to trend lower, staying below the 50 neutral level, signaling that selling momentum in the past 14 sessions has grown stronger. If this continues, bearish pressure could intensify further.
- MACD: the histogram remains below the 0 line, showing that the average strength of short-term moving averages has shifted into negative territory. This reinforces the outlook for a persistent bearish bias in the near term.
Key Levels:
- 122,600 – Major Resistance: corresponds to the zone of recent historical highs. A sustained breakout above this level could revive the bullish trend and restore upward momentum.
- 113,000 – Crucial Support: convergence of the 50-period SMA, the Ichimoku cloud, and the 23.6% Fibonacci retracement, making it the most important level to watch. A break below would open the door to a stronger bearish bias.
- 105,000 – Distant Support: aligned with the 38.2% Fibonacci retracement. A breakdown here would confirm a more consistent bearish trend and further selling pressure.
Written by Julian Pineda, CFA – Market Analyst
Follow him at: @julianpineda25
