Can BTC remain resilient as the broader market mood sours?

Bitcoin is unchanged around 109k at the time of writing after failing to hold above 110k. While optimism surrounding Federal Reserve rate cuts is supporting the price, a deteriorating market mood and September seasonality are headwinds. 

Bitcoin has fallen over 10% after hitting its record high of 124.4K in mid-August. However, the price appears to have found support as the market is increasingly pricing further Federal Reserve monetary policy easing. 

According to the CME Fed watch tool, traders are pricing in 89% probability that the Fed will cut rates by 25 basis points in the September meeting. While core PCE, the Fed's preferred gauge of inflation, rose to 2.9% the market is instead focusing on Powell's warning at the Jackson Hole symposium last month that the labour market cooling posed a risk to growth, opening the door to a rate cut. 

As a result, attention is firmly on Friday's nonfarm payroll report, which is expected to show slowing job creation. Weaker-than-expected job creation, combined with high unemployment, could cement rate cut bets, fueling a potential bitcoin rebound. 

However, the market mood has soured. Indices across Europe and US futures are trading sharply lower as bond yields rise to multi-year highs amid concerns over rising debt levels. While market sentiment has pulled BTC from its daily high and is weighing on the price near term, longer-term concerns over rising debt levels could add to the bullish case for BTC. 

BTC trading volumes are subdued  

On-chain data shows that market players have adopted a defensive stance, with demand subdued over the past week. According to Glassnode data, BTC trading volumes fell 9% to $7.7 billion. A decline in spot volume signals waning investor participation and weaker conviction among traders. 

STH realised price support 

However, the short-term holders' cost basis is a support level to watch and could determine BTC’s next move. On-chain data shows that the realised cost basis for investors who have held BTC for the past 155 days is 108k. The level is considered a psychological barrier for STHs and often acts as a support during BTC bull market corrections. However, should the level break, this can lead to extended BTC price weakness. 

Bitcoin technical analysis 

BTC ran into resistance at the rising trendline (dating back to April) and the 50 SMA, BTC fell, trading within a descending channel. While the price has recovered from the 107.5k low to 110k, testing the upper band of the falling channel. 

To stage a recovery, buyers would need to settle above 110k, the upper band of the channel, and 112.5k, the 23.6% Fib retracement of the 74.5k low and 124.4k high. A rise above here negates the near-term selloff, bringing 117k into focus. The RSI would need to recover above 50. 

Sellers will look to take out support at 107.5k to extend losses towards 105k, the 5% Fib retracement. Below here, 100k comes into play. 

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