Bitcoin’s (BTC) long and difficult Summer about to come to an end

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As a seasoned researcher with a decade-long career studying market dynamics, I have seen my fair share of bull runs and bear markets. This Summer has been a challenging one for Bitcoin investors, but I believe we are on the verge of seeing some upward momentum.

Over the summer, my research indicates that the Bitcoin market hasn’t been overly generous in terms of price increase. Instead, we’ve seen six months of persistently sideways and downward movement, which has undeniably made it challenging for investors to maintain a positive outlook. However, I sense a shift in the winds of the market. There are signs pointing towards an uptick in price momentum, potentially signaling better days ahead.

Spot Bitcoin ETFs were the catalyst for the all-time high

The Spot Bitcoin ETFs were a huge boost to the Bitcoin price, and there’s no denying it. This had the effect of putting the turbo chargers under the price of $BTC and pushed the price to its new all-time high at $73,800.

People anticipated the upward trend in price to persist after reaching that point, considering that institutions seemed to have a strong preference for an asset that was significantly outpacing the market.

What goes up must come down

Regardless of the type of asset, it can’t continue climbing without interruption as if on a straight path. The force of gravity will take hold eventually, and this happened for the leading cryptocurrency when technical and macro indicators suggested that it had reached its peak.

Consequently, the trend of prices gradually dropping started. Admittedly, there were fluctuations that made it rather volatile, but overall, a descending pattern was established. It became noticeable as the highs got lower and the lows even lower.

The bull flag

In simpler terms, when the price increases significantly and then fluctuates between relatively high and low levels for some time, it often indicates what’s known as a “bull flag” pattern in technical analysis. The Bitcoin price has been forming this pattern over the past six months, and it’s expected to break soon.

Typically, bullish flags tend to surge upward. However, the construction of these bullish flags is often a topic of discussion, with some traders, including Peter Brandt, arguing that they have extended for an unusually long time. Consequently, this prolonged duration casts doubt on their validity.

If instead we’re dealing with a bull flag formation, there’s approximately an 85% likelihood that it will result in an upward breakout. Moreover, if this bull flag holds true, a calculated move would suggest a potential price target reaching anywhere between $86,000 to $100,000, depending on where the initial pole of the flag is measured from.

Macro technical indicators have the final say

In summary, similar to how technical indicators marked the peak of Bitcoin, they will also indicate when its next phase begins. Since these indicators tend to follow trends rather than lead them, it’s possible that the lowest point has already passed.

The graph presented here indicates a bull flag pattern. Below it, you’ll find the Stochastic RSI and the Relative Strength Index. The Stochastic RSI indicates that the two lines are quite close to the bottom, trending downwards. When these lines cross each other moving upwards, we can expect a significant surge in price due to increased positive momentum.

The Relative Strength Index functions as a measure of an asset’s momentum, and it appears that the price has rebounded from a particularly robust level at 45. If the RSI line manages to surpass its downward slope, this would additionally suggest strong momentum and potentially indicate a shift in trend once it reaches a new high.

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2024-09-13 12:18