Bitcoin’s price has experienced a notable surge recently, buoyed by several key factors that may set the stage for a significant breakout in October 2024.
The cryptocurrency has been consolidating for nearly six months, marking the longest period of stability before surpassing its previous all-time high. Historical data suggests that such extended consolidation phases often precede major price movements. This pattern aligns with past trends observed following Bitcoin’s halving events.
Recent remarks by Federal Reserve Chair Jerome Powell, indicating potential rate cuts in September, contributed to Bitcoin’s ascent to $64,000, breaking through its previous supply zone of $59,000 to $62,000. Analysts are forecasting a continued rally, with Bitcoin potentially reaching $70,000 and setting a new all-time high. However, some consolidation in the interim is expected.
Extended Consolidation and Historical Trends
Bitcoin’s current consolidation period has been the longest before crossing its all-time high. The previous cycle saw a faster rise to its all-time high before the April halving, suggesting that the current consolidation phase is compensating for the earlier rapid price increase.
Crypto analyst Rekt Capital has noted that the current re-accumulation phase is not the longest in Bitcoin’s cycle. The previous year’s re-accumulation lasted about 224 days during the breakout formation.
According to Rekt Capital, if historical patterns repeat, Bitcoin could experience a breakout in October 2024, in line with the typical post-halving price movements. This projection suggests a potential breakout around late September 2024.
Institutional Interest and ETF Inflows
Institutional interest in Bitcoin has been rising, as evidenced by increasing inflows into spot Bitcoin ETFs following Powell’s comments. This resurgence in institutional involvement supports the notion that Bitcoin’s price will continue to range between $61,000 and $70,000. Market participants are awaiting key economic indicators, such as the US PCE inflation data and initial jobless claims, to provide further direction.
The market’s recent rally has been fueled by expectations of a rate cut and has restored investor confidence. This is reflected in the decline of implied volatilities (IVs) across major terms, suggesting a stabilizing market.
Open Interest and Market Sentiment
Despite the recent price surge, Bitcoin’s open interest has not seen a significant increase compared to previous instances. This lower open interest indicates a reduced risk of an immediate full retrace, as fewer long positions are available to be squeezed out.
Maintaining momentum will be crucial for Bitcoin’s bulls in the coming week. The key level to watch is the previous local high of $62,800, which will be critical in sustaining the current bullish trend.
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