Ark Invest warns of a critical juncture for Bitcoin’s price as it faces key support levels amid increasing risk factors.
In its latest monthly report, U.S. investment management firm ARK Invest analyzed Bitcoin’s crucial price supports at $52,000 and $46,000. The report highlights that Bitcoin’s price movement no longer adheres to classic bull market support levels, such as the 200-day moving average and short-term holder cost basis, which are $63,693 and $63,245, respectively.
Mean reversion levels indicate that the on-chain reversion level near $46,000 might be a last opportunity, with ARK’s overall stance being “bearish.”
“Currently, bitcoin’s most important price supports are at $52,000 and $46,000, the latter confirmed by its on-chain mean, the red line on the chart,” the accompanying commentary confirms.
A recent Glassnode report identified potential risk from short-term Bitcoin holders grappling with unrealized losses, raising concerns of potential sell-off pressure. Similarly, ARK Invest noted that institutional investors also face unrealized losses, with holders of US spot Bitcoin exchange-traded funds (ETFs) risking being underwater eight months after their launch.
The report noted that at the end of August, the estimated cost basis of US spot ETF participants was higher than Bitcoin’s price, raising concerns that “the average ETF investor may be at a loss.”
Additionally, the report cited “broad macroeconomic weakness” as a risk factor, mentioning declines in the dollar, employment, and inflation. This concern has become paramount among analysts who view these macroeconomic issues as indicators of a potential recession, with the upcoming September 18th US Federal Reserve interest rate decision being a key event.
While a 25 basis point cut is seen as potentially leading to long-term price appreciation for Bitcoin as liquidity increases and recession fears ease, the report cautioned that a more aggressive cut could have the opposite effect. Currently, traders assign a 27% probability to a 50 basis point cut, according to CME’s FedWatch tool. However, 10x Research warns that this contrasts with their view of the “prevailing consensus,” which leans towards aggressive cuts.
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.”
At the end of August, the MVRV Z-score was 1.6, while the mean score was 1.42. The mean value of the MVRV Z-score acts as a dividing line: scores above the mean indicate a bull market, while scores below suggest a potential bear market.
It remains entirely credible that we may approach these supports, which may serve as an accumulation opportunity rather than a prelude to a bear market. This sentiment is echoed by a past 10x Research report, which cited the optimal bull market entry in the low $40,000 range.
Additionally, other analysts support this view, pointing to historical and technical patterns as indicators that the final quarter of this year could be a potential breakout point, with a six-figure Bitcoin “still in play” as we move toward 2025.
#Bitcoin #Crypto #ARKInvest #BTC #MarketUpdate
