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(Kitco News) – Cryptocurrencies continued to experience range-bound, sideways trading on Thursday as investors await Friday’s speech from Fed Chair Jerome Powell to get a better read on the central bank’s plan for interest rates moving forward.

Both stocks and cryptos took a hit in the afternoon after Boston Fed President Susan Collins said it is “extremely likely” the Federal Reserve will need to hold interest rates at current levels “for a substantial amount of time” to bring inflation down to the 2% target. Collins added that there is also a possibility that they “may need to increase a little bit further.”

Stocks corrected lower after the comments and struggled to gain momentum throughout the remainder of the trading session. At the closing bell, the S&P, Dow, and Nasdaq all finished lower, down 1.35%, 1.08%, and 1.87%, respectively.

Data provided by TradingView shows that Bitcoin bulls pushed its price to a high of $26,820 late on Wednesday, but struggled to hold onto the gains as bears chipped away throughout the day on Thursday, with BTC trading back near support at $26,000 at the time of writing.

BTC/USD Chart by TradingView

“September Bitcoin futures prices [were] higher in early U.S. trading Thursday, after hitting a 4.5-month low on Wednesday,” according to Kitco senior technical analyst Jim Wyckoff.

Bitcoin futures 1-day chart. Source: Kitco

“Bulls are working to recover from recent selling pressure but have more work to do in the near term to suggest a market bottom is in place,” Wyckoff said. “The recovery in prices so far has just produced a bear flag pattern on the daily bar chart. A price downtrend line is also in place on the daily chart and the bears still have the near-term technical advantage.”

Short-term downside risk and long-term bullish potential

Market Analyst Big Smokey also warned about the potential for further declines in his latest substack note. He said that the recent bout of record-low volatility was followed by last Thursday’s pullback, which was “unpleasant for traders with a bullish bias.”

That said, Big Smokey sees a silver lining in Bitcoin’s recent market structure breakdown.

“Bitcoin’s daily RSI dropped to a rarely visited level below 20 as price collapsed to $25,000 last week and many analysts have cited the phenomenon as a reason to go ape in the current price zone,” he said. “The daily timeframe RSI has only dropped below 20 four times in BTC’s history. In 2015, 2018, 2022 and now August 2023.”

BTC/USD 1-day chart. Source: Big Smokey

“Price had become deeply oversold and the chart doesn’t lie,” he said. “Go ahead, line up those sub-20 RSI events with a daily chart and see what happened down the road. Deep value, generational buy opportunities that rarely present themselves.”

Despite this bullish outlook, Big Smokey warned there is still a possibility of more downside in the near future, but said that overall, Bitcoin is in accumulation territory.

He pointed to the recent breakdown below the 200-day moving average and the ascending trendline as reasons for the short-term bearish outlook and highlighted $23,600 as the next support level in the event that Bitcoin price continues to slide lower.

“The most immediate support is at $23.6K (where everyone is apparently waiting to buy) and if this breaks, then a bounce off the golden pocket at the 61.8% Fib level at $21,800 is a structural support dating all the way back to July 2022,” he said. “Below that, barring some crazy macro and crypto event, there’s also $19K as the kind of ‘final line’ in the sand.”

“Given these red flags, the deeply oversold RSI on the daily time frame might not be the ultimate determinant of a sell-off bottom,” he added. “In fact, there is likely more downside, a point illustrated by the weekly timeframe.”

BTC weekly RSI. Source: Big Smokey

While the RSI was deeply oversold on the daily timeframe, the weekly timeframe chart above shows the metric “hovering around a multi-year midline, with more extreme lows being made in 2015, 2018, and 2022,” Big Smokey highlighted.

BTC/USD 1-week chart. Source: Big Smokey

When this is combined with the developments affecting the market this week, including the Jackson Hole summit, “soaring yields on treasuries, a pause in the U.S. equities rally, and credible FUD [fear, uncertainty, and doubt] about Binance’s solvency and current legal woes,” Big Smokey warned, “There’s plenty of black swans and sell-off catalysts on the horizon and given the near stagnant inflow and tight liquidity in the crypto market, it only takes a small event to trigger a volatility spike.”

“In the short-term, Bitcoin price is likely to remain volatile, and negatively impacted by stringent anti-crypto regulation and the tightening of liquidity in the U.S. economy,” he said. “Despite this, the real alpha is in zooming out, looking at the historical precedent set by previous market cycles and remembering that as an asset, Bitcoin is entirely different from the U.S. dollar which is constantly losing value through a policy of central bank dilution.”

“Beyond a handful of metrics showing Bitcoin price trading at a discount, it’s also worth remembering that the infrastructure for heavy institutional investment into Bitcoin has been laid, and whether it be 3 months or 3 years, the eventual approval of a spot Bitcoin ETF is coming,” he concluded.

Altcoins drift lower

Altcoins, on the whole, traded in the red on Thursday as roughly 90% of the tokens in the top 200 recorded losses, with only one token, Bone ShibaSwap (BONE), registering a double-digit gain of 12.1%.

Daily cryptocurrency market performance. Source: Coin360

TomoChain (TOMO) was the biggest loser with a decline of 16.93%, followed by a 9.2% pullback for UniBot (UNIBOT) and an 8.2% loss for THORChain (THOR).

The overall cryptocurrency market cap now stands at $1.05 trillion, and Bitcoin’s dominance rate is 48.3%.