Bitcoin’s price has tumbled below the $60,000 mark, dropping over 4% in the past 24 hours. Despite this downturn, there’s a glimmer of hope rooted in the maturing Wyckoff reaccumulation pattern, which suggests a potential retest of $74,000 in the coming weeks. This optimistic outlook aligns with the increasing likelihood of three rate cuts by the end of 2024, bolstering investor sentiment.
The Wyckoff reaccumulation pattern is a well-known technical setup that signifies phases of consolidation and accumulation following a prolonged uptrend. This pattern delineates nine crucial stages: Preliminary Supply (PSY), Buying Climax (BC), Automatic Reaction (AR), Secondary Test (ST), Spring, Test, Last Point of Support (LPS), and finally, the Sign of Strength (SOS).
As of early August, Bitcoin has entered the “Test” phase of its Wyckoff reaccumulation pattern. In this phase, the cryptocurrency is testing its Spring phase low, around $53,400, as support. This test aims to confirm a bullish continuation towards its new Last Point of Support (LPS) at approximately $70,000. This analysis is supported by independent analyst Moustache, who shared insights on his social media channel.
According to the Wyckoff reaccumulation rule, a new uptrend cycle will commence when Bitcoin reaches the ninth and final stage, the Sign of Strength (SOS). This stage indicates a robust upward movement and market strength, confirming an uptrend once Bitcoin retests the pattern’s peak level of around $74,000.
Bitcoin’s recent decline, which has seen a 10% drop since the beginning of August, coincides with a similar downturn in the US stock market. This decline follows reports of rising unemployment claims and declining manufacturing activity in the United States. During this period, Bitcoin exchange-traded funds (ETFs) experienced approximately $200 million in withdrawals.
Interestingly, this decline occurs despite the increasing odds of three rate cuts in 2024, marking a significant shift from the previous year’s trend, where weak economic data often buoyed crypto markets. The current decline is likely driven by heightened recession alerts following the latest US jobs report. Historically, Bitcoin has struggled during periods of heightened recession fears, such as during the COVID-19 market crash in March 2020 when Bitcoin fell alongside the US stock market. Bitcoin’s price began to rebound when the Federal Reserve implemented quantitative easing and rate cuts.
Numerous crypto analysts, including Michael van de Poppe, forecast a similar price trend in the coming weeks. They suggest that while Bitcoin will face recessionary risks, it will likely rebound once the Federal Reserve implements its rate cuts in September. This perspective is consistent with historical patterns where Bitcoin has responded positively to monetary easing measures.
In summary, while Bitcoin’s current price dip below $60,000 may seem concerning, the maturing Wyckoff reaccumulation pattern offers a silver lining. The potential for a retest of $74,000, coupled with anticipated rate cuts by the Federal Reserve, could set the stage for a renewed bullish trend. However, as with all investments, it’s crucial for individuals to conduct their own research and consider the inherent risks before making any trading decisions.
