The price of bitcoin is struggling after dropping more than 16% in 4 hours on September 7th. Meanwhile, El Salvador is writing history as the first nation to adopt BTC as its national currency.
The Fundamental Look
After BTC prices dipped below the $43,000-mark on September 7th, the derivatives market witnessed more than $3.54 billion worth of liquidations. The market briefly went full-bearish as El Salvador officially embraced BTC as its national currency, leading to a flash dip of almost 16%, the most since May 2021.
Per price data, the BTC sell-off started during the early trading hours and picked up pace by midday, dropping from just shy of $53,000 to $43,000 before recovering. Dip buyers played their part, pushing prices back above $45,000. Another report from Kraken indicates that despite recent performance, BTC has consistently underperformed relative to other cryptocurrencies over the last month. Still, the mining difficulty on the Bitcoin network saw its third consecutive upward adjustment.
Meanwhile, El Salvador’s president Nayib Bukele made the most of the dip by snatching up an additional 150 BTC during peak selloff, accumulating a total of 550 BTC, worth roughly $28.8 million at current prices. With El Salvador’s Bitcoin Law now in effect, September 7th will now be recognized as “Bitcoin Day.” The global Reddit bitcoin community plans to buy $30 worth of BTC each to commemorate this occasion and pump the price.
In adoption news, crypto payment firms are racing to set up shops in El Salvador. Flexa, the “Stripe” of crypto payments, has launched Lightning Network payments with select partners and merchants in the country to power payments via digital wallets such as Strike and government-backed Chivo. Fast food chains across El Salvador have already started accepting BTC as payment, including prominent brands like McDonald’s (NYSE:), Starbucks (NASDAQ:), and Pizza Hut.
While the previously announced $150 million Bitcoin Trust is still under wraps, the authorities have made it clear that the goals are multifold, including the roll out of Bitcoin ATMs across the country, raising awareness about cryptocurrencies and the newly-launched Chivo app/wallet, and an airdrop of $30 million worth of BTC.
Following El Salvador’s footsteps, neighboring country Honduras has set up its first-ever Bitcoin ATM in the capital city of Tegucigalpa. Likewise, the Republic of Panama has also introduced a new bill on regulating cryptocurrencies that intends to recognize digital assets like BTC as an alternative global payment method. Visa (NYSE:), the leading payment service provider, also plans to integrate BTC onto its platform for Brazil, making it usable for both payments and store of value.
Whales of the Week
September 2: 5,601.000 BTC moved from multiple addresses to an unknown walletSeptember 3: 3,000.000 BTC moved from multiple addresses to an unknown walletSeptember 3: 5,123.811 BTC moved from multiple addresses to an unknown walletSeptember 4: 5,065.560 BTC moved from multiple addresses to Bitstamp September 6: 4,000.000 BTC moved from multiple addresses to BitfinexSeptember 6: 4,000.000 BTC moved from multiple addresses to Xapo September 7: 4,760.802 BTC moved from multiple addresses to an unknown wallet
The Technical Take
Bitcoin prices fell week over week, mainly pulled down by the flash crash in the pair on September 7th. Despite a relative underperformance relative to significant peers over the last month, BTC-USD slipped -7.05%, outpaced by the -8.78% decline in the ETH-USD pair and the -20.35% slump in ADA-USD over the same period.
After breaking higher from the equidistant triangle pattern on low volumes, Bitcoin prices continued to trend higher before experiencing the massive retracement lower, on significantly higher than average volumes, in the largest single downward move in months. Still, given Bitcoin’s recent highs, the move may reflect a possible pullback in recent gains and not necessarily indicate a new bear market.
The pair found support from the 50-day moving average, which is still on an upward trajectory towards the 200-day moving average. Any crossover to the upside would be considered a “golden cross” technical setup, which may precede a substantial bullish move.
The pullback in prices might have some additional room to run to the downside. A quick look at the Fibonacci retracement levels highlights that a retreat as deep as the 38.2 level, that corresponds with $37,971, may not be unreasonable.
The key levels to watch as prices evolve include support at $44,700 and $42,200, with any deeper decrease potentially signaling a renewed bear market. On the upside, resistance at $47,600 and $49,900 will potentially create a ceiling on any near-term recovery ahead of the $50,000 psychological level.
Disclosure: At the time of publication, Reuben Jackson did not have a position in any of the securities mentioned in this article.
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