In a swift turn of events, Bitcoin’s (BTC) price has taken a considerable hit over the last few weeks, plunging once again below the critical $26,000 threshold in the past seven days.
This decline arrives as bullish sentiment wanes, confronted by an array of obstacles. Concerns over potential interest rate increases, the unsettling state of China’s property market, and a general ebb in market activity collectively contribute to the cryptocurrency’s downward trajectory.
Even so, the recent downward spiral of Bitcoin’s price has left many investors uncertain about whether the crypto asset has actually bottomed.
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Historically, Bitcoin’s bearish trends have concluded when it reached the Proof of Work (PoW) Floor Pricing Model, which currently stands at $14,800, cryptocurrency analyst Ali Martinez said on August 28. This figure implies a substantial potential downside of more than 40%.
BTC protected by strong support at $21K
Nevertheless, any such drop would necessitate a prior breach of the robust support level at $20,900, Martinez added.
“In previous cycles, BTC has reached the PoW Floor Pricing Model to mark the end of a bearish trend. This level currently sits at $14,800, with strong support looming at $20,900.”
– Martinez emphasized.
The PoW Floor Pricing Model is a concept used in the cryptocurrency market to identify potential price floors during bearish trends. It is derived from the historical price patterns of cryptocurrencies, which tend to find support around certain price levels that reflect the cost of their mining operations, considering factors like electricity and hardware expenses.
Bitcoin price analysis
At press time on August 29, BTC was trading at $25,963, up 0.25% in the past 24 hours.
The maiden cryptocurrency lost around 0.3% over the past week and more than 11% on the month, losing roughly $65 billion in market cap during that period.
Year-to-date, the leading cryptocurrency is still up over 56% following a disastrous 2022 crypto winter.
Bitcoin could stage a ‘fake move’
On Monday, widely followed trader CrypNuevo said BTC could see a notable ‘fake move’ that could push its price as low as $25,300 in what he described as a strategy by market makers to stimulate more short positions among retail investors, ultimately creating more liquidity to the upside.
As a result, this would allow market makers to orchestrate a short squeeze that could propel Bitcoin prices between $27,000 and $28,300 in the coming days, CrypNuevo noted in its “BTC Sunday Update” analysis based on liquidity data and market psychology.
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