The price of bitcoin (BTC) could rise by more than 50% in September, a month considered inauspicious for the cryptocurrency due to its historically low returns.
Will BTC price double bottom, before reaching $30,000?
The bullish contrarian signal comes from a possible double bottom on the long-term charts of bitcoin against the US dollar. Double bottoms are bullish reversal patterns that look like the letter W because of two lows and a change in direction from the bottom to the upside.
Bitcoin’s fall below $20,000 in July, followed by a strong close towards $25,000 and then back to $20,000 in August, confirms the double bottom scenario. The cryptocurrency would complete the pattern after bouncing towards $25,000.
A W-shaped price move could ideally be followed by another strong upward move – a breakout below the double bottom.
The double bottom upside objective is found after measuring the distance between the peak (neck) and the lowest levels of the pattern and adding the result to the breakout point, as shown below. In other words, a potential 50% rally in price.
As a warning, double bottom setups have a low risk of failure, about 21.45%, according to a Samurai Trading Academy study of popular chart patterns.
Market falls back into “great fear”
Bitcoin’s bullish reversal scenario occurs against the backdrop of general price depreciation in risk markets.
First, BTC’s fall towards $20,000 began after Federal Reserve Chairman Jerome Powell reaffirmed his aggressive stance on inflation in Jackson Hole last week. This prompted bitcoin market sentiment to fall into the “extreme fear” category, according to the Fear and Extreme Index, or F&G.
The market is not shining $BTC about $20k. Back in True Fear today.
Live chart: https://t.co/Jr5151zN7I pic.twitter.com/UnztrZP7FP
— Philip Swift (@PositiveCrypto) August 31, 2022
The bitcoin market does not like hanging around $20,000. Back today in the “big scare” category. Live Chart: https://t.co/Jr5151zN7I pic.twitter.com/UnztrZP7FP — Philip Swift (@PositiveCrypto) August 31, 2022
However, for Philip Swift, the creator of Bitcoin data platform LookIntoBitcoin, the market sentiment is not as fearful as it was in June due to “a huge amount of forced selling” by the crypto hedge fund. Terra.
“F&G’s score is not as scary as it was when the score dropped to 6; he’s at 23 right now,” Swift explained, adding:
“There was blind panic at the time, and we are currently in a period of apathy where people are tired of the bear market and more interested in their summer holidays and/or the crisis in the cost of living”.
The statement is in line with bitcoin investors selling their holdings at an average daily loss of $220 million, according to data tracked by Glassnode.
“The psychology of investors seems to be eager to ‘get their money back’, with a lot of spending going on and around their base price,” the chain analysis firm said in its latest report. bitcoin bulls are fighting an uphill battle.
Also read: UBS Raises US Recession Chances to 60%, But What Does This Mean for Cryptocurrency Prices?
This includes whales, entities that hold between 1,000 and 10,000 BTC. They have recently been hoarding bitcoin with the price around $20,000, according to data platform Ecoinometrics.
The whale addresses that control 1k to 10k BTC are starting to accumulate coins on chain again.
—ecoinometrics (@ecoinometrics) August 29, 2022
Whale addresses that control between 1,000 and 10,000 BTC start accumulating bitcoins on the blockchain again. It certainly won’t negate the bear market, but some people seem to like #Bitcoin at $20,000. pic.twitter.com/7oQmAZ4T5K- ecoinometrics (@ecoinometrics) August 29, 2022
“In this bear market, you have to take a dollar averaging position or buy the decline outright and wait,” wrote Nick, an analyst at Ecoinometrics.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Cointelegraph.com. All investment and trading involves risk, you should do your own research before making a decision.