bitcoin Faces Crucial Support Levels
Ark invests caution that it's a "make or break moment" for the bitcoin price as it approaches critical support levels. The latest monthly report from US investment management firm ARK Invest delves into bitcoin's most crucial price supports of $52,000 and $46,000. Interestingly, the report highlights how bitcoin price movements no longer adhere to traditional bull market support levels, such as the 200-day moving average and short-term holder cost basis.
The report emphasizes that the $46,000 on-chain mean reversion level could be the last chance for bitcoin, with ARK taking a bearish stance overall. The commentary accompanying the chart confirms that $46,000 is a vital price support level based on on-chain metrics.
Bring in the Bears: staking Risk Factors Threaten Key Support
A recent Glassnode report has identified short-term bitcoin holders grappling with unrealized losses as a potential source of risk. This situation raises concerns about a possible sell-off pressure in the market. Additionally, institutional investors are also facing unrealized losses, particularly holders of US spot bitcoin ETFs who could find themselves in a precarious position months after their launch.
The ARK Invest report underlines broader macroeconomic weaknesses as a significant risk factor, including declines in the dollar, employment rates, and inflation. These macroeconomic concerns have prompted analysts to speculate about a potential recession, especially given the upcoming US Federal Reserve interest rate decision on September 18th.
While a conservative rate cut could lead to long-term price appreciation for bitcoin as liquidity increases and recession fears diminish, a more aggressive cut could have the opposite effect. Traders are currently assigning a 27% probability to a 50 basis point rate cut, which contrasts with 10x Research's view of the prevailing consensus favoring aggressive cuts.
Guiding Light: ARK Remains Optimistic On bitcoin
Despite the bearish indicators, ARK Invest maintains a positive outlook for bitcoin, citing historical data that supports the current bull market sentiment. The bitcoin MVRV Z-score, a metric comparing market cap to cost basis, remains in "bull market territory," indicating potential growth.
By the end of August, the MVRV Z-score stood at 1.6, surpassing the mean score of 1.42. Scores above the mean signify a bull market, while scores below suggest a bear market. This data suggests that the $40,000 support levels could present an accumulation opportunity rather than indicating a bear market trend.
According to some analysts, the final quarter of the year could be a breakout point for bitcoin, with the potential for a six-figure valuation as we approach 2025.
