The price of Bitcoin (BTC) could soar more than 50% in September, a month otherwise considered worrisome for the cryptocurrency due to its historically low returns.
BTC price double bottom then $30,000?
The contradictory upside signal comes from a potential double bottom pattern on the longer-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 downside to upside.
Bitcoin’s decline 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 bouncing towards $25,000.
A W-shaped price move in an ideal scenario could be followed by another sharp upward move – a double bottom breakout.
Meanwhile, the bullish target of a double bottom is found after measuring the distance between the pattern’s peak (neckline) and the lowest levels and adding the result to the breakout point, as shown below. In other words, a potential price increase of 50%.
As a precaution, double bottom setups carry a low degree of failure risk, around 21.45%, according to the Samurai Trading Academy study of popular chart patterns.
The market falls back into “extreme fear”
The Bitcoin bullish reversal scenario occurs amid general price depreciation in risky markets.
Originally, BTC’s descent to $20,000 began after Federal Reserve Chairman Jerome Powell reaffirmed his hawkish stance on inflation in Jackson Hole last week. This has further prompted Bitcoin market sentiment to fall into the “extreme fear” category, according to the popular Fear and Greed Index, or F&G.
The market does not profit $BTC hang around $20,000. Throwback to Extreme Fear today.
Live chart: https://t.co/Jr5151zN7I pic.twitter.com/UnztrZP7FP
— Philip Swift (@PositiveCrypto) August 31, 2022
But, for Philip Swift, creator of Bitcoin data source LookIntoBitcoin, market sentiment isn’t as scary as it was in June due to a “huge amount of forced selling” at the crypto hedge fund today. now defunct Three Arrows Capital and stablecoin project Terra.
“The F&G score is nowhere near as scary as it was when the score fell to 6; he’s currently at 23,” Swift explained, adding:
“There was blind panic at the time, when we are currently in a period of apathy where people are tired of the bear market and are more interested in their summer holidays and/or the crisis in the cost of life.”
The statement aligns with Bitcoin investors selling their holdings with an average daily loss of $220 million, according to data tracked by Glassnode.
“The psychology of investors seems to be one of just wanting to ‘get my money back,’ with a lot of spending being done at and around their cost base,” the on-chain analytics firm said in its latest weekly report, adding that Bitcoin bulls are fighting an uphill battle.
Related: UBS Raises U.S. Recession Chances to 60%, But What Does That Mean for Crypto Prices?
This includes whales, entities that hold between 1,000 and 10,000 BTC. They have been hoarding Bitcoin lately as the price hovers around $20,000, according to data resource Ecoinometrics.
Whale addresses controlling 1k to 10k BTC start accumulating on-chain coins again.
— ecoinometrics (@ecoinometrics) August 29, 2022
“In this bear market, you either want an average dollar cost in a position or buy the drop straight and wait,” wrote Ecoinometrics analyst Nick.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.