Bitcoin Tests A Crucial $78,000 Support After Sharp Drop

Bitcoin has just erased part of its rebound after a peak at 82281 dollars on September 4. Indeed, the price dropped back to around 79000 dollars, a decline of nearly 4% in a few hours. The daily trend remains favorable, but short-term indicators signal a loss of momentum. It is the maintenance of the support located around 78500 dollars that will now determine whether this decline remains temporary or invalidates the recent bullish breakout.

The $78,000 support decides the fate of Bitcoin’s rebound

The decline started after Bitcoin’s rejection at $82,281. Afterwards, the price was brought back to a zone of buy orders located between 78500 and 79200 dollars. Volumes exceeded those typically recorded on previous hourly candles.

Thus, the $78,000 threshold now constitutes the main line of defense for buyers. Its breach could expose the starting zone of the last rise, located between 76567 and 77300 dollars.

In the coming sessions, various levels will be useful to gauge the market’s strength :

• The immediate support is around $78,531 ;
• The zone between $76,800 and $77,300 forms the second barrier ;
• A return above $79,420 would improve the short-term trend ;
• Main resistances are located at $80,335 and $81,430 ;
• A daily close above $82,281 would revive the bullish movement.

According to the analysis, a confirmed break of $76,800 could invalidate the breakout of September 3. It would bring Bitcoin back towards the daily pivot of $74,081.

The rise to $82,000 partially relied on a short squeeze

The speed of the decline is also explained by the nature of the previous move. This rebound above $82,000 did not come exclusively from new spot acquisitions. It had been intensified by the forced closing of multiple leveraged short positions.

Nearly $250 million in Bitcoin short positions were liquidated in one day, compared to only $21.5 million in long positions. Across the entire crypto market, liquidations reached around $758 million, including $480 million on bearish bets, according to some data.

A short squeeze can trigger a very rapid rise. Sellers forced to close their positions must buy the asset, which temporarily increases demand. However, the movement may lose momentum once these buybacks are complete if new buyers do not take over.

The decline from $82,281 therefore does not yet indicate that the entire rebound is over. However, it shows that the market has not managed to hold the gains obtained through liquidations.

Moving averages remain favorable, unlike momentum

The daily trend remains stronger than the moves observed on hourly charts. Thus, BTC stays above most of its exponential and simple moving averages. Fourteen out of fifteen trend indicators still gave a bullish signal.

Buyers therefore retain the advantage on the general trend. Such an observation, however, depends on the price’s ability to successively reclaim $79,420, $80,335, and $81,430.

A more cautious message is conveyed by oscillators. The RSI hovered around 66 and remained neutral, while the MACD and the momentum indicator offered bearish signals. Altogether, nine oscillators were neutral, two bearish, and none bullish.

This difference indicates that the general structure of the rise remains intact, but its immediate strength decreases. Sellers dominate the very short term without yet controlling the daily trend.

A strong defense of the $78,000 could allow Bitcoin to rebound towards $80,300, then $81,400. Conversely, a close below $76,800 could increase the risk of a return to $74,081, a further decline of nearly 6% compared to the first support.