Why Bitcoin is Crashing Again and Will it Retest Yearly Lows

Bitcoin’s price is failing to hold higher levels as it plunges to lower lows and over the past 24 hours, Bitcoin has dropped by 8%, according to data from CoinGecko, to trade at $18,470.

The price dip comes amid a bearish macro environment, with investors worried about a dip below $15k.

Bitcoin crashes again amid fears of testing yearly lows

Bitcoin continues to plunge further, and it is now consolidating losses at the $18,000 level.

The three-month chart (below) shows a period of intense volatility as the prices tumble back to what the coin was trading earlier this month.

Bitcoin crashes again amid fears of testing yearly lows

The $18k levels remain intact – however, the overall outlook remains bearish until Bitcoin can successfully break above higher levels and reclaim $19,000.

If the price breaks below $18k, it could trigger a bloodbath in the market, and the prices could crash to $15k and further in the short term.

The monthly chart still shows a bearish outlook as the price continues to be rejected at critical support levels.

While prices seemed to consolidate between September 13 and September 18, it now seems like bears are taking control; as the charts spike investor fears that more dips could be on the way.

Bitcoin crashes again amid fears of testing yearly lows 2

The Relative Strength Index elicits a bearish sentiment. The indicator shows that the most likely scenario is a downtrend, which is expected to continue in the short term.

As the selling pressure intensifies, the bears will remain in control. The moving average convergence divergence (MACD) below the signal line further proves the bearish outlook.

The market could continue bleeding because no positive developments are expected to prop the price. However, several bearish factors are at play.

Goldman Sachs analysts are bearish on Bitcoin

The past year has seen an influx of institutional investors flocking to the cryptocurrency sector, with most opting to allow clients to buy Bitcoin to gain exposure to the crypto asset.

Goldman Sachs is among the institutional investors investing in Bitcoin, and its analysts now believe the coin is on a bearish trend. Goldman Sachs economists, spearheaded by Jan Hatzius, have predicted what will happen to Bitcoin’s price following the ongoing rate hikes by the Federal Reserve.

They have said that the Federal Reserve will increase the interest rates by 0.75% in September and then increase by 0.50% in November.

The Federal Reserve has been raising the interest rates to tame the rising inflation levels. The hike in interest rates has been instrumental in influencing Bitcoin’s price movements this year. The action has led investors to move out of riskier assets and seek shelter in safe assets such as cash.

Bitcoin is currently down by over 70% from an all-time high created in November last year and from $50k at the start of 2022 (below).

bitcoin year to date chart

With the price wobbling at the $18,000 level, some analysts believe a bottom has reached. However, more dips could come if the Fed continues raising the interest rates.

Bitcoin’s correlation with the US stock market has also increased significantly. The Nasdaq Composite Index has especially been influential over Bitcoin’s prices, and with the rising rates, deeper corrections could be on the way.

One of the strategists at Goldman Sachs, Sharon Bell, predicts that the recent uptrend in the stock market could be a bull trap, warning that equities could plunge by 26% if the Federal Reserve is more aggressive in increasing the interest rates.

The warnings by Goldman Sachs strategists also coincide with a spike in the Bitcoin short positions opened by institutional investors. The rise in these short positions is seen in the CME data that was also highlighted in the weekly report of the Commodity Futures Trading Commission (CFTC).

Bitcoin options show traders anticipate a drop to 10K-12K

Another bearish macro outlook is in the Bitcoin options that will expire at the end of the year. The options show that most traders anticipate that Bitcoin’s price will drop to the $10,000 to $12,000 range.

The call-put open interest ratio on September 18 is currently at 1.90, and the call options for the $45,000 strike price hold the maximum weight. On the other hand, the strike price between $10,000 and $23,000 has four put options for every three call options, showing that a bearish outlook is more realistic.


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