Bitcoin Price Potential Double Bottom Could Trigger BTC Rally To $30K Despite ‘Extreme Fear’
Bitcoin’s (BTC) price could rise by more than 50% in September, a month otherwise considered ominous for the cryptocurrency due to its poor historical returns.
BTC price double bottom and then to $30K?
The contrarian upside signal comes from a potential double bottom pattern on Bitcoin’s longer time frame charts 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 downside to upside.
Bitcoin’s fall below $20,000 in July, followed by a sharp rally towards $25,000 and a subsequent decline to the $20,000 level in August, partially confirms the double bottom scenario. The cryptocurrency would complete the pattern after retracing towards $25,000.
A W-shaped price movement in an ideal scenario could be followed by another sharp move higher – a double bottom breakout.
Meanwhile, the upside target of a double bottom is found after measuring the distance between the pattern’s top (neckline) and lows and adding the result to the breakout point, as illustrated below. In other words, a potential price increase of 50%.
As a word of caution, double bottom setups have a small margin of error, about 21.45%, according to Samurai Trading Academy’s study of popular charting patterns.
Market slides back to ‘extreme fear’
Bitcoin’s bullish reversal scenario occurs amid general price declines across the risk markets.
Initially, BTC’s decline to $20,000 started after Federal Reserve Chairman Jerome Powell reaffirmed his hawkish stance on inflation at Jackson Hole last week. It further caused Bitcoin market sentiment to fall into the “extreme fear” category, according to the popular Fear and Greed index, or F&G.
The market is not enjoying $BTC hanging around $20k. Back to extreme fear today.
Live Chart: 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 a “huge amount of forced selling” at now-defunct crypto hedge fund Three Arrows Capital and stablecoin project Terra.
“The F&G score is not nearly as intensely feared as it was when the score dropped to as low as 6; it’s currently at 23,” Swift explained, adding:
“There was blind panic back then, whereas we are currently in a period of apathy where people are fed up with the bear market and are more interested in the summer holidays and/or the cost of living crisis.”
The statement is consistent with Bitcoin investors selling their holdings at a daily average loss of $220 million, according to data tracked by Glassnode.
“Investor psychology appears to be one of simply ‘getting my money back,’ with a large amount of spending taking place at and around their cost base,” the chain research firm stated in its latest weekly report, adding that Bitcoin – the bulls are fighting an uphill battle.
Related: UBS Raises US Recession Odds to 60%, But What Does This Mean for Crypto Prices?
That includes whales, devices that hold anywhere between 1,000 and 10,000 BTC. They have been accumulating Bitcoin lately as the price hovers around $20,000, according to data resource Ecoinometrics.
The whale addresses that control 1k to 10k BTC start collecting coins on the chain again.
It certainly won’t interrupt the bear market, but apparently some love it #Bitcoin to $20k. pic.twitter.com/7oQmAZ4T5K
— ecoinometrics (@ecoinometrics) 29 August 2022
“In this bear market you either want to dollar cost average a position or straight up buy the dip 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 the views of Cointelegraph.com. Every investment and trade involves risk, you should do your own research when making a decision.
