The price of bitcoin (BTC) could climb more than 50% in September, a month that is otherwise considered ominous for the cryptocurrency due to its poor historical returns.
BTC Price To Double And Then To $30K?
A contrarian upside signal is coming from a potential double-bottom pattern on the longer time frame chart of bitcoin against the US Dollar. Double-bottoms are bullish reversal patterns that resemble the letter “W” due to two lows and a change in direction from downward to upward.
Bitcoin declined below $20,000 in July, followed by a sharp recovery to $25,000 and a return to the $20,000 level in August, partially confirming the double-bottom scenario. The cryptocurrency will complete the pattern after a rally towards $25,000.
In an ideal scenario a W-shaped price move could be followed by another sharp move – a double-bottom breakout.
Meanwhile, after measuring the distance between the pattern’s neckline and the lowest levels and adding the results to the breakout point, a double-bottom upside target is found, as shown below. In other words, a potential 50% price rally.
As a note of caution, a double-bottom setup carries an approximately 21.45% failure risk, according to Samurai Trading Academy’s study of popular charting patterns.
Market slips in “extreme fear”
Bitcoin has a bullish reversal scenario amid general price depreciation in riskier markets.
Basically, after Federal Reserve Chairman Jerome Powell re-expressed his hard stance on inflation at Jackson Hole last week, BTC began to drop to $20,000. According to the popular Fear and Greed Index, or F&G, this prompted bitcoin market sentiment to fall into the “extreme fear” category.
not enjoying the market $BTC Hangs around $20k. Back in extreme fear today.
Live Chart: https://t.co/Jr5151zN7I pic.twitter.com/UnztrZP7FP
— Philip Swift (@PositiveCrypto) 31 August 2022
But for Philip Swift, the creator of bitcoin data source LookIntoBitcoin, market sentiment is not as dire as it was in June due to “massive extortion” at now-defunct crypto hedge fund Three Arrows Capital and stablecoin project Terra.
Swift explained, “The F&G score is nowhere near as scary as it was back when the score dropped from 6, it currently stands at 23.”
“There was blind panic at the time, whereas we are currently in a period of nostalgia where people are tired of the bear market and are more interested in their summer vacations and/or cost of living crisis.”
According to data tracked by Glassnode, the statement aligns with bitcoin investors who sold their holdings at a daily average loss of $220 million.
“Investor psychology appears to be one that is only eager to ‘get my money back,’” the on-chain analytics firm said in its latest weekly report.
RELATED: UBS Raises US Bearish Chances to 60%, But What Does It Mean for Crypto Prices?
This includes whales, entities that hold anywhere between 1,000 and 10,000 BTC. According to data resource Econometrics, they have been hoarding bitcoin lately as the price hovered around $20,000.
Whale addresses controlling 1k to 10k BTC are starting to deposit coins on the chain again.
Sure it won’t cancel the bear market but apparently some people love #bitcoin At $20k. pic.twitter.com/7oQmAZ4T5K
— econometrics (@ecoinometrics) 29 August 2022
“In this bear market, you want to either position dollar cost averaging or buy a straight dip and wait,” wrote Nick, an analyst at Econometrics.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, so you should do your own research when making a decision.
