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The world’s largest cryptocurrency, Bitcoin (BTC), continues to face selling pressure as it lost the $26,000 support level earlier this week. While some believe it could be a good time to buy the dips, questions remain about whether Bitcoin and its investors are ready for it.
Fear of Decline in Bitcoin
Popular crypto analyst Ali Martinez revealed a model based on historical data spanning the last ten years, which triggers a bull run when Bitcoin’s (BTC) price exceeds the average cost basis of owners with a 6-month to 3-year history.
Currently, this critical breakout level for BTC based on this model is set at $33,755. This means that the price of BTC needs to rise more than 30% from current levels to confirm the uptrend. Otherwise, doors are wide open for further BTC price corrections.
Other market analysts also shared similar views on the recovery in BTC prices. Bloomberg’s senior commodity strategist Mike McGlone compared Bitcoin’s price movement to the Nikkei index. In his latest report, McGlone said:
Bitcoin has a close directional relationship with the Nikkei 225, and recent crypto weakness may be contagious. This or the benchmark crypto can recover and follow the path of Nikkei, which reached its highest level in 33 years in June.
Maintaining a position above $31,000 can indicate the strength of Bitcoin’s recovery. However, there are valid reasons for the downward trend to continue. The strategist also highlighted that the Federal Reserve and most central banks are still implementing tightening measures.
Bitcoin Chart Formation Indicates Major Correction
Bitcoin is forming a very similar chart pattern before the price crash following the 2021 bull run. According to crypto analyst Rekt Capital, in 2021, BTC formed two distinct peaks similar to a double top pattern before forming the third peak at a lower high. Currently, BTC seems to have formed two distinct peaks similar to a double top pattern again and a potential third peak at a lower high.
The 2021 movement of BTC suggests a potential scenario where Bitcoin could form its third peak at a lower high and result in a rejection around the $26,000 support level. Following this, the movement indicates that Bitcoin could experience a recovery, but it may turn the $26,000 level into another downward rejection before finding a new resistance.
As mentioned before, September has historically been a month of major corrections for Bitcoin, catching the attention of investors and analysts. The chart pattern suggests that this time may not be different.
