Bitcoin steadies after pullback: A healthy reset rather than a bearish warning?

BTC technical analysis 

Bitcoin is edging higher on Tuesday, climbing back above 113k after 2.3% losses on Monday. Ethereum, Dogecoin, and XRP are rising by 0.6%, 1.2%, and 1.5%, respectively. The total cryptocurrency market capitalization has risen 0.6% to $3.9 trillion over the past 24 hours. 

The move higher comes after a brutal selloff yesterday, wiping out a buildup of excess leverage following last week’s Federal Reserve rate decision, in which the central bank cut rates by 25 basis points. This excess leverage, combined with thin volumes, meant that a drop in Bitcoin in early trade sparked a much deeper and broader selloff. 

Almost 400,000 traders were liquidated with $1.7 billion in positions, of which 95% were long, highlighting the overly bullish positioning. 

While the mood remains cautious, technical levels have been respected. Today’s move higher suggests that market players see this as an isolated selloff rather than a bearish warning. History tells us that these washouts of extreme positioning and overleveraged trades often create a healthier, more stable base.  

Retail and whales buy the dip 

Retail traders are buying the dip. The average holder is now at a loss, as shown by the 30-day MVRV ratio, which dipped below 0 for the first time in two weeks. A negative MVRV indicates undervaluation and can often precede a strong reversal.  

Bitcoin whales are also showing encouraging signs. According to CryptoQuant data, wallets holding between 1000 and 10,000 BTC continue to accumulate. This aligns with Santiment data, which shows that large holders have added 56,000 BTC since late August. Accumulation by this cohort suggests confidence in the outlook and reduces the likelihood of an extended run lower. 

Setting the stage for “Uptober” 

With this in mind, yesterday’s selloff could be considered a healthy reset rather than a bearish move, setting the stage for the next catalyst and a solid October. Bullish drivers, including lower interest rates, rising liquidity, strong institutional and corporate demand, and a pro-crypto stance in the White House, remain supportive of BTC. 

With 8 days to go until the end of September, BTC trades 4.3% higher this month, a month that is typically a red month for BTC. In previous years, green Septembers have resulted in double-digit gains in October. 

Bitcoin technical analysis 

BTC trades above its multi-month rising trendline. Its recovery from the 107.2k low ran into resistance at 117.9k before falling back to retest 112.5k, the confluence of the rising trendline and the 23.6% Fib retracement of the 74.4k low and the 125.4k high. 

Should the 112.5k support continue to hold, buyers will look to rise above 116k, the falling trendline resistance. A rise above 117.9 k confirms the breakout and creates a higher high, bringing 124k and fresh record highs into focus.  

Sellers will need to close below 112.5k to bring 110k into focus.  A break below 107.2k creates a lower low, altering the chart's structure.

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