Originally published on: August 04, 2024
Bitcoin’s price has taken a tumble, dropping below $60,000 by over 4% in the last day. Despite this, there is optimism of a potential retest of $74,000 in the near future, driven by the emergence of a developing Wyckoff reaccumulation pattern and the increasing likelihood of three rate cuts by the end of 2024.
Understanding the Wyckoff Reaccumulation Pattern
The Wyckoff reaccumulation pattern is a technical indicator that identifies phases of consolidation and accumulation following a sustained uptrend. This pattern encompasses critical stages such as the Preliminary Supply (PSY), Buying Climax (BC), Automatic Reaction (AR), Secondary Test (ST), Spring, Test, Last Point of Support (LPS), and the Sign of Strength (SOS).
Currently, Bitcoin is in the “Test” phase of the Wyckoff reaccumulation pattern, with the cryptocurrency testing the support level around $53,400. The next target is the new Last Point of Support (LPS) at approximately $70,000. A chart shared by independent analyst Moustache on theX channel illustrates this progression.
Anticipating the Price Surge
As per the Wyckoff reaccumulation rule, once Bitcoin reaches the final stage known as the Sign of Strength (SOS) after retesting the peak level of around $74,000, a new uptrend cycle is expected to commence. This final stage signifies strong market momentum and confirms an upward trend.
Factors Influencing Bitcoin’s Movement
Despite the positive projections, Bitcoin has experienced a 10% decline in tandem with the US stock market due to concerns over rising unemployment claims and reduced manufacturing activity. Investments in Bitcoin exchange-traded funds have seen withdrawals of around $200 million following these developments.
The declining trend of BTC counteracts the growing possibility of three rate cuts by 2024, a departure from the usual reaction of crypto markets to weak economic data observed in the past year.
Navigating Recession Concerns
The recent recession alerts triggered by the US jobs report have likely contributed to Bitcoin’s downward trajectory. Historically, Bitcoin has faced challenges during periods of economic uncertainty, as evidenced by its parallel drop with the US stock market during the COVID-19 crash in March 2020. However, Bitcoin showed resilience and rebounded following interventions by the Federal Reserve.
Looking Ahead
Analysts like Michael van de Poppe anticipate a similar price trend in the upcoming weeks, with Bitcoin potentially encountering recessionary risks that may be offset by the Federal Reserve’s planned rate cuts in September.
Please note that this article does not provide investment advice. Readers are advised to conduct their own research before making any financial decisions.
