Bitcoin is preparing for further decline as it faces resistance around $62,000

• Bitcoin is trading above $58,000, failing to recover from Sunday’s 3.6% drop.
• US-listed Bitcoin-tracking exchange-traded funds (ETFs) saw 160.10 million outflows last week
• On-chain data shows negative signs for BTC, signaling a bearish trend ahead.

Bitcoin (BTC) is trading just above $58,000 on Monday after failing to recover from a 3.6% drop on Sunday. Last week, exchange-traded funds (ETFs) tracking Bitcoin in the US saw average outflows of $160.10 million, while on-chain data is showing negative signals, suggesting a bearish trend ahead.

Daily Market Reasons: Bitcoin Struggles Around $58,000 As On-Chain Data Shows Negative Biases

• As reported by the TASS news agency, Russian President Vladimir Putin has officially signed a law legalizing cryptocurrency mining in Russia. The new legislation introduces key concepts such as digital currency mining, mining pools and mining infrastructure operators. It reclassifies mining activities as part of turnover rather than digital currency issuance.
• At a recent government meeting, President Putin stressed the importance of “seizing the moment” to establish a legal framework for digital currencies, stressing their potential to boost Russia’s economic development and the need for proper regulation and infrastructure.

• According to cybersecurity group VE Sin Filtro, on Friday, Venezuela recently blocked access to cryptocurrency exchange Binance and other online platforms amid nationwide protests over disputed election results in the country, a situation confirmed by Binance’s official account on Saturday for Latin America. However, there has been no announcement from the Venezuelan government regarding this action or any indication of when it might be resolved.

• Bitcoin briefly topped $62,600 on Thursday, marking a 25% gain in just over three days from last Monday’s decline. As is often the case, middle traders were caught off guard. Meanwhile, social volume searches reveal a spike in excitement about potential Bitcoin prices reaching $70,000 to $75,000, signaling that the price of Bitcoin has possibly reached a local price peak.

Bitcoin social volume chart

• According to Coinglass data, BTC’s long-short ratio is 0.972. This sub-one ratio generally reflects bearish sentiment in the market, as more traders anticipate the asset’s price to fall, reinforcing Bitcoin’s bearish outlook.

BTC long to short chart

• Additionally, Bitcoin Spot ETF data shows that it saw total outflows of $160.10 million last week. Monitoring the net flow data of these ETFs is crucial to understanding market dynamics and investor sentiment. The combined Bitcoin reserves held by the 11 US spot Bitcoin ETFs amount to $48.81 billion.

Total Chart Bitcoin Spot Etf

Technical Analysis: BTC wants a relief rally before the downtrend resumes

Bitcoin price has been repeatedly tested and rejected by the 61.8% Fibonacci retracement level of $62,066 (drawn from the July 29 swing high of $70,079 to the August 5 low of $49,101). On Monday, it is trading slightly lower by 0.1% at $58,659.

If the $62,066 level holds as resistance, aligning with the broken trendline and 100-day EMA at around $63,021, selling pressure may increase.

Failure to break above $62,066 could lead to a 19% decline, possibly retaking the daily support level of $49,917.

The Relative Strength Index (RSI) and Awesome Oscillator (AO) indicators on the daily chart are trading below neutral levels of 50 and zero. These momentum indicators strongly point to bearish dominance.

BTC/USDT Daily Chart

However, if Bitcoin were to close above the August 2 high of $65,596, it would set a higher high on the daily chart, potentially leading to a 6% rally in its price to challenge the weekly resistance at $69,648.