As the recent Bitcoin price recovery stalls, there is a risk that the coin could drop by 25% in the coming weeks.
Bitcoin (BTC) recovered by 27% from its lowest point on Aug. 5 but faced strong resistance at $62,000. It has recently lost key support at $60,000 and was trading at $59,000 on Aug. 13.
Data from CoinGlass shows that Bitcoin’s 24-hour volume in the spot market has stabilized at $34 billion. However, open interest in the futures market has moved sideways in recent days, standing at $28 billion, down from last month’s high of over $37 billion.
One likely reason for the low open interest is that many Bitcoin investors suffered substantial liquidations as the coin dropped to $49,000 and then quickly rebounded to $62,000.
There are also concerns about the U.S. presidential election, with most polls indicating a close race between candidates. Polymarket odds have tilted towards Harris, showing her leading in key states like Michigan and Pennsylvania.
Donald Trump has endorsed Bitcoin and insisted that his administration will not sell the vast coins it holds. He has also stated that he would fire Gary Gensler, the Securities and Exchange Commission chair who has focused on lawsuits during his tenure.
Technically, Bitcoin faces substantial risks. It has already formed the highly-feared death cross pattern as the 50-day and 200-day Simple Moving Averages have crossed each other. Additionally, the two lines of the MACD indicator have slipped below the neutral point.
At the same time, as shown above, Bitcoin has formed a series of lower lows and lower highs, indicating a downtrend.
Therefore, a drop below this month’s low of $49,000 will be a sign that bears have prevailed and that the falling broadening wedge pattern has been invalidated. Such a move could lead to a further decline to the 50% Fibonacci Retracement point at $44,900, which is 25% below the Aug. 13 level.
