👉 Bitcoin faces significant price fluctuations due to a variety of factors

Bitcoin (BTC) is under significant pressure, falling to $62,498 on August 1, its lowest in two weeks. The decline is attributed to diminishing expectations for a US rate cut and the distribution of 47,000 BTC from the bankrupt Mt. Gox exchange. Investors are now closely monitoring key support and resistance levels to identify the next big buying opportunity.

Critical Support and Resistance Levels for Bitcoin

On August 2, some analysts noted that Bitcoin was approaching a critical point, offering a potential entry point for market participants. According to technical analysis, Bitcoin’s recent price action is characterized by a classic 5-wave uptrend followed by an ABC correction. This pattern is seen as a distinct Elliott wave on the 4-hour chart.

The first buy level to consider is between $61,880 and $62,300. Analysts have identified this range as a critical support zone. This area is being strengthened by the confluence of various technical indicators such as the 1.618 Fib Extension, the 0.5 Fib Retracement, and the Val (Value Area). A recovery from this range could signal a continuation of the uptrend on higher time frames. However, if the price fails to hold above this support zone, the next significant level to watch is around $56,810, which corresponds to the 2.618 Fib Extension. This level could provide a new buying opportunity if the price fails to hold the initial support.

On the other hand, the first major resistance for Bitcoin is at $66,745, marked by the Point of Control (POC). Historically, this level has acted as a significant resistance point, and a break supported by high trading volume could indicate a buying opportunity that could push the price to new highs. Additionally, the area around $69,885, marked by the Value Area High (VAH), also serves as resistance and is a critical level to watch closely.

Why is Bitcoin Falling?

Bitcoin’s price is currently under selling pressure due to a variety of factors. On July 31, the US Federal Open Market Committee (FOMC) decided to keep interest rates at 5.25%, in line with market expectations. Fed Chairman Jerome Powell highlighted strong GDP growth and confidence in falling inflation, signaling a cautious approach to future rate cuts.

In response, investors increased their holdings of US Treasuries, with five-year yields falling to a six-month low. Growing geopolitical tensions and rising jobless claims have further influenced this shift.

Another major factor was the distribution of almost $3 billion worth of Bitcoin from Mt. Gox on July 30, which raised concerns about a potential wave of selling. The BTC in question was transferred to Kraken and Bitstamp, which contributed to the recent price decline as investors anticipated a significant impact on the market.