Bitcoin started to experience a post-FOMC rally after the Fed announced a 50 bps cut. Despite a bearish Sept. seasonality trend Bitcoin continues to show some bullish sentiment here. I think the next two weeks are times of uncertainty for the financial markets, but I can see two scenarios playing out. The first scenario is a continued rally up to $68.5k to retest the upper range of the bull flag pattern. The second scenario is two weeks of downside between Sept. 23 – Oct. 6. Historically BTC is bearish around late Sept, early October. However, I think the sentiment is bullish and I’m seeing bullish signs on the chart for now. Q4 of the Bitcoin halving is one of the most bullish time periods, and FTX is redistributing $16 billion in payments to creditors. There is speculation that billions of dollars of FTX repayments will flow back into the crypto market over this time period. I think the bullish sentiment is driving the crypto market for now.
Bitcoin Prepares for the Belief Stage
The optimism stage in an asset cycle typically follows a period of recovery and early growth, where market participants begin to believe that the asset’s value will continue to rise steadily. This stage is marked by increasing confidence, with investors feeling positive about future prospects, leading to more buying and upward momentum. During this time, skepticism from earlier periods fades, and the narrative around the asset becomes largely optimistic, often attracting more retail investors who fear missing out on potential gains. In the context of Bitcoin, it seems likely that the market is now exiting this optimism stage. The signs of peak optimism, such as overly confident price forecasts and a rush of new entrants, suggest that the market may be transitioning into the belief or thrill stage. These stages, which follow optimism, are characterized by even stronger price growth as euphoria sets in, but they also carry the risk of a bubble forming, with the potential for increased volatility as the cycle progresses.
Bitcoin v. Internet Adoption
Bitcoin’s adoption curve, as seen in comparison to the early growth of internet users during the dot-com boom, highlights an interesting parallel between the two technological revolutions. The chart illustrates that Bitcoin’s adoption is tracking a similar trajectory to the internet in its early days, with Bitcoin users in 2023 roughly corresponding to the number of internet users around 1998-1999. This similarity suggests that Bitcoin, like the internet, is still in its early adoption phase, despite its increasing popularity and visibility. As the internet rapidly scaled from this point onward, reaching over a billion users in just a few years, the comparison implies that Bitcoin may also be on the cusp of significant mainstream growth. Just as the internet transformed industries and global communications, Bitcoin’s blockchain technology has the potential to revolutionize finance and various sectors. However, it is crucial to note that while the internet’s adoption was driven by widespread utility and convenience, Bitcoin’s future growth will depend on overcoming regulatory hurdles, market volatility, and expanding use cases. This comparison places Bitcoin in a promising position for widespread adoption, but the path forward will likely involve both opportunities and challenges, much like the internet’s development during the dot-com era.
Two Weeks of Downside for Bitcoin?
There has been a notable pattern for Bitcoin dating back to July that consists of alternating two weeks of upside followed by two weeks of downside. If this trend continues BTC could experience two weeks of downside this week, and I think depending on where BTC bottoms out over the next 2 weeks we will know how bullish the price action looks over the next few months. For now BTC continues to trade sideways to avoid a drop, and there is support at the yellow trendline around $62.5k.
Pretty boring day in the markets. Bitcoin has moved sideways for 4 days in a row, and is trending for another neutral daily candle close in a few hours. I think the rally could be losing some steam and BTC could start a correction soon. On the way down $62.5k is the first key support level followed by a support zone between $58.5k – $60.3k. For now I would monitor to see if the price holds above $62.5k.
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