The price of Bitcoin (BTC) could rise by more than 50% in September, a month that, on the other hand, is considered disastrous for the cryptocurrency due to its low historical profitability.
Does BTC price bottom out and then hit $30,000?
The conflicting bullish signal comes from a potential double bottom pattern on the long-term charts of Bitcoin against the US Dollar. Double bottoms are bullish reversal patterns that resemble the letter W due to two bottoms and a change in direction from bearish to bullish.
Bitcoin’s drop below $20,000 in July, followed by a strong recovery towards $25,000 and a subsequent return to the $20,000 level in August, partially confirms the double bottom scenario. The cryptocurrency would complete the pattern after rallying towards $25,000.
A W-shaped price move in an ideal scenario could be followed by another sharp move to the upside – a double bottom breakout.
Meanwhile, the upside target of a double bottom is found after measuring the distance between the pattern’s peak (neckline) and lower levels and adding the result to the breakout point, as illustrated below. In other words, a potential 50% price rally.
As a note of caution, double bottom setups carry a small degree of risk of failure, around 21.45%, according to the Samurai Trading Academy study of popular chart patterns.
The market falls back into “extreme fear”
The bullish reversal scenario for Bitcoins comes amid the general depreciation of risk markets.
Originally, BTC’s decline to $20,000 began after Federal Reserve Chairman Jerome Powell reaffirmed his aggressive stance on inflation in Jackson Hole last week. This caused Bitcoin market sentiment to fall into the “extreme fear” category, according to the popular Fear and Greed, or F&G, index.
The market is not enjoying $BTC hanging around $20k. Back into Extreme Fear today.
Live chart: https://t.co/Jr5151zN7I pic.twitter.com/UnztrZP7FP
— Philip Swift (@PositiveCrypto) August 31, 2022
However, for Philip Swift, creator of the LookIntoBitcoin data feed, market sentiment is not as dire as it was in June due to a “huge amount of forced selling” at now-defunct cryptocurrency hedge fund Three Arrows Capital. and the Terra stablecoin project.
“The F&G score is nowhere near as intensely fearful as it was before, when the score dropped to 6; it’s currently at 23,” Swift explained, adding:
“There was blind panic then, whereas now we’re in a period of apathy where people are tired of the bear market and more interested in their summer vacations and/or the cost of living crisis.”
The statement aligns with Bitcoin investors selling their holdings seeing an average daily loss of $220 million, according to data tracked by Glassnode.
“Investor psychology appears to be one that is willing to simply ‘get my money back,’ with a large degree of spending taking place in and around their cost base,” the on-chain analytics firm stated in its latest weekly report, adding that Bitcoin bulls are fighting an uphill battle.
That includes whales, entities that hold between 1,000 and 10,000 BTC. They have been hoarding Bitcoin lately as the price teeters around $20,000, according to data resource Ecoinometrics.
The whales addresses controlling 1k to 10k BTC are starting to accumulate coins on-chain again.
For sure that won’t cancel the bear market but apparently some people love #bitcoin at $20k. pic.twitter.com/7oQmAZ4T5K
— ecoinometrics (@ecoinometrics) August 29, 2022
“In this bear market, it’s best to dollar cost average a position or outright buy cheaper and wait,” an Ecoinometrics analyst wrote.
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