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The bullish outlook appears despite the ongoing Bitcoin sell-off, which is being led by the growing risks of a recession in the United States.
Market Analysis
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Bitcoin (BTC) is down over 4% in the past 24 hours, falling below $60K. However, a retest of $74,000 in the coming weeks is possible, at least based on a maturing Wyckoff reaccumulation pattern and increasing odds of three rate cuts by 2024’s end.
Bitcoin is testing key spring support
The Wyckoff reaccumulation pattern is a technical setup that identifies phases of consolidation and accumulation after a prolonged uptrend.
In this pattern, the price typically goes through nine critical phases, namely 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 Aug. 4, Bitcoin had entered the “Test” phase of its Wyckoff re-accumulation pattern.
In this phase, the cryptocurrency is testing its Spring phase low—at around $53,400—as support to confirm bullish continuation toward its new Last Point of Support (LPS) at around $70,000, as shown in the chart shared by independent analyst Moustache on his X channel.
According to the Wyckoff re-accumulation rule, a new uptrend cycle will begin when Bitcoin enters the ninth and final stage, called the Sign of Strength (SOS), after retesting the Wyckoff pattern’s peak level of around $74,000.
This final stage signals strong upward movement and market strength, indicating a confirmed uptrend.
Three rate cuts possible in 2024 amid recession risks
Bitcoin’s price has slid 10% alongside the US stock market since Aug. 1, when the US reported unemployment claims hitting an almost one-year high and declining manufacturing activity. Bitcoin exchange-traded funds (ETF) have witnessed circa $200 million in withdrawals in the same period.
Interestingly, BTC’s decline appears despite increasing odds of three rate cuts in 2024 instead of one, marking a significant departure from the trend observed over the past year, where crypto markets often welcomed weak economic data.
Related: Bitcoin whale volume from exchanges hits 9-year high as analysts call BTC price bottom
This decline is likely driven by rising recession alerts following the latest US jobs report.
Historically, Bitcoin has struggled during periods of heightened recession fears. For example, during the COVID-19 market crash in March 2020, Bitcoin fell in tandem with 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, see a similar price trend in the coming weeks. In other words, Bitcoin will face recessionary risks but rebound after the Fed implements its rate cuts in September.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
This article first appeared at Cointelegraph.com News
