Bitcoin is struggling at the $24,000 level after finding its perceived low for the cycle in June and going on to rise more than 20% in July, for its best month of the year. The cryptocurrency rose above $24,000 twice this week. It also touched that level at the end of July, but was unable to hold there before retrying this week. However, while a breakout above that mark could open the gates for bitcoin to test the next leg up, it doesn’t necessarily have lasting implications, technical analysts say. “I think $29,000 will be very, very difficult for bitcoin to take out on the upside,” Julius de Kempenaer, senior technical analyst at StockCharts.com, said this week. “Sellers came in around $24,500 last month and the buyers were not strong enough to push it beyond that $24,500. If that happens, it would be a short-term positive, but you’ve got to see it all in the light of the big break down.” Bitcoin did climb as high as about $24,700 at one point Thursday, though momentarily, as investors digested two better-than-expected inflation reports. It found its low in June, at $17,601.58, according to Coin Metrics, and then went on to the big comeback in July. Since then the crypto world has had plenty of good news to keep investor sentiment high – from positive inflation readings and Federal Reserve updates to BlackRock offering investors bitcoin trading, to the successful trial runs of the Ethereum Merge scheduled for September. Still, there could be a lot more pain on the way after this current rally, the technical analysts say, and it’s still too soon to call the bottom. “Bitcoin is weak after completing that massive drop,” de Kempenaer said of the cryptocurrency’s 70% peak-to-trough decline this year. “All the upside that we are currently seeing is taking place in recovery, so we’re going counter trend, and those are dangerous rallies because they’re very fragile.” If bitcoin breaks above $24,000, the upside potential would be limited to about $20,000, he added. On the downside, if bitcoin falls below its June low, it could continue down to $12,500. Bitcoin “is long-term oversold but needs support discovery and improvement in long-term momentum to suggest a major low has been made,” according to Fairlead Strategies’ Katie Stockton. Mid-September could be a significant turning point for bitcoin, Youwei Yang, director of financial analytics at StoneX, said. For him, $25,000 is the key resistance level for bitcoin. If it can notch that, there’s potential for a “near-term summer rally” up to the next key level to test of $28,000, he said – ahead of the Federal Reserve’s Sept. 21 meeting and the Ethereum merge, which is currently scheduled for the middle of September. Still, Yang said after the midterm elections he expects to see much more pain extending through at least the beginning of 2023.
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