Bitcoin steady at $56,000 as Metaplanet plans $69 million injection and institutional investors hold firm

• Metaplanet announces $69.13 million injection for further investment in Bitcoin.
• Santiment's data shows BTC's swift rebound to $57,000 occurred right after social media predicted a drop in the $40,000-$45,000 range.
• On-chain data shows that institutional investors hold firm despite the recent price decline.

Bitcoin's (BTC) price is recovering its initial weekly losses, trading 1.2% higher at $56,666 at the time of writing on Wednesday after a 7% drop on Monday. The recovery move is bolstered by Metaplanet's announcement of a $69.13 million investment in Bitcoin and on-chain data indicating that institutional investors remain steadfast despite recent declines. However, technical analysis and market conditions suggest that the broader downward trend could resume in the coming days.

Daily digest market movers: Bitcoin holds $56,000 level as Metaplanet announces $69 million injection to increase its BTC holdings

• On Tuesday, Japanese investment and consulting firm Metaplanet announced a "¥10.08 billion Gratis Allotment of Stock Acquisition Rights," aiming to raise approximately $69.13 million for further investment in Bitcoin. This follows Metaplanet's recent decision to adopt Bitcoin as a reserve asset to address risks related to Japan's significant debt and Japanese Yen (JPY) volatility. The firm's strategy mirrors that of MicroStrategy, led by Michael Saylor, which has accumulated 226,500 BTC worth $14.3 billion since 2020, positioning itself as the largest corporate Bitcoin holder. Metaplanet's move could pave the way for broader adoption of Bitcoin and cryptocurrencies, among other companies.

• According to Santiment's data, Bitcoin's swift rebound to nearly $57,000 occurred right after social media predicted a drop in the $40,000-$45,000 range. This demonstrates the significant role of crowd sentiment in the cryptocurrency's recent recovery, as historically, as shown in the graph below, similar concerns about Bitcoin falling to between $40,000 and $45,000 have often led to rapid price recoveries.

Santiments Bitcoin Social mentions chart

• Additionally, Santiment's data shows that the ratio of positive to negative comments on social media frequently signals key top and bottom opportunities in the market. For example, Ethereum peaked shortly after the mid-July ETF hype, and Bitcoin's recent highs and lows, influenced by waves of greed and fear, were also evident. Currently, Bitcoin's social sentiment indicates potential bottoming opportunities, signaling possible entry points for investors.

Bitcoin ratio of positive to negative comments chart

• CryptoQuant data indicates that smart money remains active in the market, as institutional investors have not exited despite the recent price drop. These investors might have pulled out if the decline had been a significant issue tied to the US economic situation. However, the Bitcoin Balance chart and Bitcoin Sum Coin Age chart show no decrease in smart money, suggesting that institutional investors have not cashed out or withdrawn amid the recent market downturn.

Bitcoin Sum Coin Age chart

Bitcoin Balance chart

Technical analysis: BTC primed for temporary upsurge before downtrend resumes

Bitcoin’s price broke below the ascending trendline (drawn from multiple swing lows starting July 5) on Friday, leading to a 12% decline over the following three days. However, it tested support at $49,917, bounced back with a 3.7% increase on Tuesday, and showed a slight recovery to trade 1.2% higher at $56,666 at the time of writing on Wednesday.

In this scenario, BTC might see a dead-cat bounce — a short-lived price increase amid a broader downtrend — potentially encountering resistance at the 61.8% Fibonacci retracement level of $62,066 (drawn from the swing high of $70,079 on July 29 to Monday's low of $49,101).

This level aligns with the broken trendline and the 100-day Exponential Moving Average (EMA) at around $63,021, marking it a critical reversal zone.

Failure to break above $62,066 might trigger a 19% crash, back to retest the $49,917 daily support level.

The Relative Strength Index (RSI) indicator in the daily chart is around 35, just above the oversold threshold. This indicates the possibility of a temporary relief rally before the downward trend resumes.

BTC/USDT daily chart

However, a close above the August 2 high of $65,596 would change the market structure by forming a higher high on the daily timeframe. Such a scenario might drive a 6% rise in Bitcoin's price to retest its weekly resistance at $69,648.