The cryptocurrency market is performing relatively well today, with Bitcoin (BTC) price hitting $61,000 and Ethereum and Ripple prices also climbing. In the short term, investors can expect a bullish outlook to continue from the last two weeks of August through mid-September. Historically, stocks and cryptocurrencies have not performed well, signaling a possible correction. However, Q4 remains very bullish for BTC and the broader cryptocurrency market.
3 reasons to be cautious about the cryptocurrency market:
- Historical data suggests that Bitcoin's seasonality will act as a headwind and prevent the cryptocurrency market from seeing a bigger upswing this month and next.
- From a medium to short-term perspective, Bitcoin price needs to hold the four-hour support level at $54,676 to sustain the ongoing recovery rally.
- On the lower timeframe, BTC could trigger a smaller rally towards $62,200.
Crypto Market Crash or Recovery: What Happens Next?
The cryptocurrency market has neither crashed nor surged, but has remained stable for over five months, a trend that can be attributed to uncertain macroeconomic conditions, recession fears, and geopolitical tensions.
While all of the above factors are true and impact Bitcoin and the broader cryptocurrency market, what goes unnoticed is seasonality and how it impacts the market. Historical data over the past 13 years shows that the third quarter is the worst performing, with an average return of 2.78%.
So far, the monthly return table shows that Bitcoin price saw a 3.10% total return in July and -7.98% total return in August. If the current outlook continues and history repeats itself, investors should not expect a significant increase in BTC price. However, this quarter has been a lucky one for long-term buyers and institutional investors, who have been able to accumulate BTC at a discount. Wherever BTC goes, the cryptocurrency market will follow. Therefore, investors need to understand the seasonality of Bitcoin price.
If we sort the months based on returns, we can see that September is the worst performing month with an average return of -5% over the past 13 years. Therefore, investors can expect the cryptocurrency market to fall in September, especially if history repeats itself.
According to monthly and quarterly earnings, Bitcoin price predictions show no signs of instigating an upward trend.
Bitcoin price outlook for short to medium term is bullish
The 4-hour Bitcoin price chart shows that the 5-month consolidation has formed a value area stretching from the low of $62,200 to the low of $72,200. A retest of the value area low on August 8 resulted in a rejection, resulting in a 10% crash and the formation of a higher low on the 4-hour chart. Thus far, BTC price has recorded two higher highs and three higher lows, indicating that a recovery rally is in full swing. As long as this BTC support holds, the cryptocurrency market is likely to enjoy a neutral to bullish outlook. A drop below the support level of $54,676 on the 4-hour chart will invalidate the ongoing upside and suggest a continuation of the downtrend.
The short-term outlook for Bitcoin price is also bullish as it is exhibiting an inverse head and shoulders formation, which predicts a breakout above the $59,837 hurdle for a 5% rally to $62,917.
Overall, the short to medium term outlook for the cryptocurrency market remains bullish, but the longer term outlook remains unclear, at least until the end of September. Therefore, investors should refrain from taking swing long or short positions until the fourth quarter.
Frequently Asked Questions (FAQ)
The short-term outlook is bullish and the cryptocurrency market could see another upswing.
The major support level on the 4-hourly chart is at $54,676.
Historical data shows that the third quarter was the worst performing, with an average return of 2.78%.
Akash Girimasu
Akash Girimath is an engineer by training with a deep interest in the complexities of the cryptocurrency market. As a senior reporter and analyst, he specializes in cryptocurrency analysis and provides his expertise to prominent platforms such as AMBCrypto and FXStreet. In addition to his analytical work, Akash actively trades cryptocurrencies and manages a small cryptocurrency fund for friends and family. His role includes providing insightful market analysis and keeping readers updated on the latest developments in the cryptocurrency world. Follow him on Youtube, X and LinkedIn.
Disclaimer: The presented content may contain the personal opinions of the author and are subject to market conditions. Please conduct market research before investing in cryptocurrencies. The author or publication is not responsible for any personal financial losses.
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