Is Bitcoin Eyeing a Comeback in the Near Future?
As of August 16, 2021, the price of Bitcoin experienced a decline of 4.26%, resulting in a value of $58.13k, following a drop to $61k on August 13. This decrease in value is not attributed to the typical fluctuations of the stock market. Concurrent with the decline in price, there was a substantial surge in trading volume, with over $32.79 billion changing hands on Wednesday, representing a 14.17% increase. This juxtaposition prompts the question: Can we anticipate a resurgence for Bitcoin in August, or are we headed towards a significant market correction?
Short-Term Outlook
The present chart reveals a potential twin peak pattern, characterized by two distinct peaks in either prices or volume activity within a brief timeframe. Two prominent green peaks within the shaded region signify a rapid increase in price or volume activity followed by declines. This twin peak formation indicates a potential reversal and presents either a top or bottoming-out pattern.
Additionally, the Accumulation/Distribution Line (ADL) in the lower section of the chart is gradually increasing, signaling that the price is likely nearing a bottom. This analysis concurs with the notion that a twin peak formation is in progress and is expected to materialize around $42K-$43.5K, potentially indicating further price reduction before Bitcoin resumes its long-term upward trajectory.
Long-Term Considerations: The September Fed Rate Cut Decision
A pivotal juncture for Bitcoin is approaching on September 17, aligning with the forthcoming Federal Reserve rate decision. The Fed’s decision carries the potential to create more bullish market conditions, ultimately aiding Bitcoin in its recovery from its current state. There is an expectation of a surge in Bitcoin towards new all-time highs (ATHs) of up to $80k — 85k in the days following the Fed’s announcement. This forecast is rooted in the broader macroeconomic perspective of Bitcoin as a hedge against inflation and uncertainties in monetary policy.
If Bitcoin becomes solidified as the preferred asset, the heightened demand is poised to propel its prices to unprecedented levels, while traditional markets adapt to the post-Fed rate cut reality.
A Potential Altcoin Season on the Horizon
Following Bitcoin’s projected rally to new ATHs, the market is anticipated to transition into a full-fledged Altcoin season by December. After substantial movements in Bitcoin prices, altcoins typically undergo notable rallies as investors seek higher returns from smaller-cap assets. Consequently, a robust December for the altcoin market is expected, with renewed interest and capital entering the market following Bitcoin’s performance. While this outlook may appear assertive, it is prudent to prepare for potential scenarios, particularly in light of Bitcoin’s recent price actions and the twin peaks signal.
In the long term, Bitcoin may be laying the groundwork for a significant bottoming formation that will fuel a significant charge towards the end of 2025. At present, investors should monitor the Federal Reserve’s rate decision on September 17th as a potential catalyst for Bitcoin’s future trajectory.
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