Bitcoin is facing challenges in making a strong comeback due to several key reasons. Here are 3 reasons why the market is cautious:
- Weak seasonal pattern: August and September are usually the weakest months for Bitcoin in the year. According to a report by 10X Research, August is the worst month for Bitcoin in the past 12 years, with declines in 8 out of the last 12 years. September is no better, as Bitcoin has averaged a 4.6% decline in 8 out of the last 12 years.
- Strong resistance levels: Bitcoin needs to overcome dense resistance areas around $112,000 and $115,000 to reach higher price levels. Without strong momentum, Bitcoin may get stuck at these levels. Important support areas are around $106,000 and $94,000, which will play a role in temporarily holding the price in case of a decline.
- Capital inflow to ETF funds stagnates: The capital inflow into Bitcoin ETF funds is also stagnating, contributing to an increase in price correction risks. This makes many investors more cautious when investing in Bitcoin.