3 Reasons Why Cryptocurrency Markets Won’t Recover Until October

Cryptocurrency markets were relatively positive today, with Bitcoin (BTC) prices up nearly 1%. In the short term, investors can expect yesterday’s bullish outlook to continue, catalyzing another rally in the cryptocurrency market. However, if BTC price fails to hold above a key support level, it could trigger a cryptocurrency market crash.

3 reasons why the cryptocurrency market should be cautious:

1. Historical data shows that Bitcoin seasonality will add a headwind, preventing cryptocurrency markets from rallying massively this month and next.
2. From a medium to short-term perspective, Bitcoin price needs to hold the four-hour support level of $54,676 to sustain the ongoing recovery.
3. From a shorter time frame, BTC could trigger a minor rally to $62,200.

Cryptocurrency Markets Crash or Rally: What’s Next?

Cryptocurrency markets have neither crashed nor recovered, but have been moving sideways for over five months. This can be attributed to uncertain macroeconomic conditions, recession fears, and geopolitical tensions, to name a few.

While all of the above factors are true and have affected Bitcoin and the broader crypto markets, one thing that goes unnoticed is seasonality and its effect on the markets. Historical data from the last 13 years shows that the third quarter has the worst performance, with an average return of 2.78%.

So far, the monthly returns chart shows that Bitcoin price has recorded a total return of 3.10% in July and -7.98% in August so far. If the current outlook continues and history repeats itself, investors should not expect a massive surge in BTC price. But this quarter is a blessing in disguise for long-term buyers and institutions as it allows them to accumulate BTC at a discount. Wherever BTC goes, the cryptocurrency markets will follow suit. Therefore, investors should understand the seasonality of Bitcoin price.

Ranking the months based on their performance shows that September is the worst performing month, with an average return of -5% over the past 13 years. Investors can therefore expect cryptocurrency markets to fall in September, especially if history repeats itself.

According to monthly and quarterly returns, Bitcoin price prediction shows no signs of an uptrend starting.

Bitcoin Price Medium to Short Term Outlook Points to Upside

The four-hour Bitcoin price chart shows that the five-month consolidation has created a value zone extending from a low of $62,200 to $72,200. The retest of the low of the value zone on August 8 resulted in a rejection and a 10% drop, which created a higher low on the four-hour chart. So far, BTC price has established two higher highs and three higher lows, signaling that the recovery rally is in full swing. As long as this support holds for BTC, crypto markets will likely enjoy a neutral to bullish outlook. A break of the $54,676 support level on the four-hour chart will invalidate the ongoing uptrend and suggest a continuation of the downtrend.

The short-term outlook for Bitcoin price is also bullish as it features an inverse head and shoulders pattern. This outlook also projects a 5% rise to $62,917 if it breaks above $59,837.

Overall, the short- and medium-term outlook for the cryptocurrency market remains bullish, while the long-term outlook, at least until the end of September, remains uncertain. Investors should therefore refrain from taking long or short positions until the fourth quarter.

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Akash Girimath

Akash Girimath is an engineer at heart, but he is interested in the chaos of financial markets. Akash is a senior analyst and reporter who also regularly trades cryptocurrencies and manages a small crypto fund for his friends and family.

Disclaimer: The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication does not assume any responsibility for your personal financial losses.