The latest monthly report from US investment management firm ARK Invest cautions that Bitcoin is facing a “make or break moment” as it grapples with crucial support levels and stacking risk factors. The report highlights the importance of Bitcoin’s support levels at $52,000 and $46,000, noting that the cryptocurrency no longer respects classic bull market support levels like the 200-day moving average and short-term holder cost basis. Mean reversion levels suggest that the on-chain reversion level near $46,000 could serve as a last chance, with ARK defining its overall stance as “bearish.”
A recent Glassnode report also pointed to a potential “source of risk” as short-term Bitcoin holders face unrealized losses, raising concerns of a potential sell-off pressure. Institutional investors are also grappling with unrealized losses, with holders of US spot Bitcoin exchange-traded funds (ETFs) potentially being in the red eight months after their launch. Additionally, concerns about broad macroeconomic weakness, including declines in the dollar, employment, and inflation, have raised fears among analysts about a potential recession, with the upcoming September 18th US Federal Reserve interest rate decision looming large.
Despite these bearish indicators, ARK Invest maintains a bullish outlook for Bitcoin, citing historical data supporting the current bull market. The Bitcoin MVRV Z-score, which compares market cap to its cost basis, remains in “bull market territory,” with the end-of-August MVRV Z-score at 1.6. While ARK Invest recognizes the potential for Bitcoin to approach support levels like $46,000, they view it as an accumulation opportunity rather than a prelude to a bear market. Other analysts also support this view, pointing to historical and technical patterns as grounds for a potential breakout in the final quarter of this year, with a six-figure Bitcoin still being considered a possibility as we move toward 2025.
The report from ARK Invest highlights the importance of the upcoming September 18th US Federal Reserve interest rate decision, with the potential for a 25 basis point cut seen as a favorable outcome that could lead to long-term price appreciation for Bitcoin. However, a more aggressive cut could have the opposite effect, heightening recession fears and potentially leading to a significant Bitcoin retracement, with some anticipating a 20% drop. Traders currently assign a 27% probability to a 50 basis point cut, according to CME’s FedWatch tool, with 10x Research cautioning that this contrasts with their view of the prevailing consensus leaning towards aggressive cuts.
In conclusion, while Bitcoin faces a challenging period with crucial support levels and stacking risk factors, ARK Invest remains optimistic about the cryptocurrency’s future, citing historical data and bullish indicators supporting the current bull market. Despite concerns about unrealized losses and macroeconomic weaknesses, ARK Invest believes that Bitcoin’s potential to approach support levels like $46,000 could present an accumulation opportunity rather than signaling a bear market. The upcoming US Federal Reserve interest rate decision on September 18th will be a key event to watch, with the outcome potentially impacting Bitcoin’s price trajectory.
