Bitcoin (BTC) stayed stubbornly anti-trend on Aug. 22 as $26,000 became a magnet for intraday BTC price action.
BTC price “death chop” returns
Despite being heavily oversold according to relative strength index (RSI) readings, Bitcoin refused to offer any form of recovery bounce from levels last seen two months prior.
Market participants were restless, with popular trader Jelle referring to intraday movements as the “death chop.”
“At this stage it feels like a game of chicken to see who is going to make a move to break the chop,” monitoring resource Material Indicators continued.
Analyzing liquidity on the Binance BTC/USD order book, Material Indicators noted a broad lack of liquidity, increasing the potential for a sharp move in either direction.
“The market is waiting to see if more bid or more ask liquidity is going to be attracted to the range,” it explained to X subscribers.
“So far, we are seeing small amounts of bid liquidity ladder up from $20k closer to the active trading zone, but no liquidity of any size (new or moved) has been stacked into the range defending price from a Lower Low.”
The implications were nonetheless potentially very serious for bulls, with a lower low (LL) apt to risk even $20,000 support going forward.
“Needless to say, printing a LL in this TF has macro implications. Printing 2 LLs would push BTC down to sub $20k levels,” Material Indicators concluded.
RSI strengthens “V-shape recovery” thesis
Zooming out, hope remained that Bitcoin could rescue its overall uptrend.
In a dedicated YouTube update on the day, Michaël van de Poppe, founder and CEO of trading firm Eight, noted the heavily oversold signals being generated by RSI.
On 12-hour timeframes, RSI measured less than 19 at the time of writing — near its lowest levels since the 2018 bear market bottom. Daily levels were similar, reaching their lowest since the March 2020 COVID-19 cross-market crash.
“Every time we see such a move, you get a sort of V-shape recovery back up, and it finds an equilibrium on a higher floor,” Van de Poppe said about previous BTC price flash crashes.
He added that it was “very likely” that Bitcoin could stage a comeback to focus on $26,500 or more next.
“Current Bitcoin price action reminds me of September 2020 — just before the start of the previous bull market,” Jelle meanwhile suggested alongside a comparative chart.
“Absorption and slowly grind higher here for a while — and I could see this play out similarly.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.