Bitcoin (BTC) has been struggling to break the $ 50,000 mark for over 10 days. However, on September 2, the premium cryptocurrency briefly surpassed the milestone, sending positive ripples across the market. Since then, the token has dropped below the mark to trade in the $ 49,000 range before bouncing to hit the $ 50,000 mark once again on September 3.
Since Bitcoin often behaves in a cyclical pattern, a look at the monthly trends for September could reveal patterns in price, which in turn could be useful in assessing the outlook for the next month. Historically, September has been one of the most mediocre months for BTC. A look at monthly price data since 2013 reveals that the token has posted positive gains in September twice in eight years, in 2015 and 2016, peaking at 6%, which could be considered almost flat.
Pete Humiston, manager of Kraken Intelligence, the research department of the Kraken exchange, told Cointelegraph about what this trend could mean for this year:
“September is historically the worst performing month for Bitcoin. That being said, it has been on the verge of $ 50,000 for the past three weeks. If Bitcoin were to break above this psychologically significant milestone, it could renew investor interest and generate the necessary momentum to bring it back to $ 60,000. “
In fact, BTC has been in the red in September in four of the last five years, making it the darkest period for the coin. Nevertheless, The $ 50,000 mark is considered to be one of the significant resistance levels for this asset since it broke the barrier just days after Tesla CEO Elon Musk announced that the company had bought $ 1 worth of BTC, 5 billion on February 8, in addition to starting to accept Bitcoin as a payment method. The token that briefly passes this resistance level earlier this month could be a positive sign for the asset.
Cointelegraph discussed the current scenario with Hunain Naseer, a senior analyst at OKEx Insights, the research team at crypto exchange OKEx. He said: “As things stand today, the BTC fight for under $ 50,000 is the big fight the bulls need to win before we can see $ 60,000. The move from $ 50k to $ 60k is likely to be much faster than the current move from $ 40k to $ 50k. “
S2F model sees less deviation
Twitter user PlanB’s Stock-to-Flow (S2F) model has been one of the most accurate quantitative models attempting to assess and forecast the price of Bitcoin. It does this based on the supply injections of the outstanding asset in a given period. Based on the model, the price of Bitcoin is assumed to have exceeded $ 100,000 to exchange hands around the $ 105,000 mark.
However, BTC is currently recovering from a larger deviation from S2F in late July, when it appeared that the model could be invalidated. This is not the first time that the price of Bitcoin has deviated negatively from the model. The deviation started at the end of October 2018 and lasted until mid-June 2019 with a duration of almost seven months. By comparison, the current ongoing negative variation has lasted for only about three months. It should be noted here that for the remainder of the year, the S2F model is considerably flat and anticipates a similar range at the beginning of the fourth quarter.
Naseer further discussed the model’s forecasts compared to market price, saying: “Given the current sentiment and long-term fundamentals, it is not out of the question for BTC to hit $ 100,000 in December, especially since October and November have historically been big months for Bitcoin. They could easily set it all the way to $ 100,000 a year. mid-December before any correction. “
Regarding this model, Jake Wujastyk, chief market analyst at TrendSpider, a technical analysis software company, told Cointelegraph: “Based on the use of movement measured from the March 2020 low to the October 2020 candle. (seven months), applying this movement measured to the minimum of June 2021 would place it at about USD 100,000 by the end of the year, assuming that the measure is the same “.
Although the S2F model has been very accurate in forecasting the price of Bitcoin so far, it is important to note that all technical indicators have their limitations. Humiston spoke further about the broader outlook of the cryptocurrency market, saying, “A move to $ 100,000 in four months would require a significant inflow of capital. While it’s certainly not impossible, it seems unlikely now that investors’ attention has turned to alternative cryptoassets like Ether, Cardano, and Solana. “
The altcoin boom may prevent BTC from touching the $ 100,000 level this year
While Bitcoin has slowly approached the $ 50,000 mark, and indeed struggles to hold onto it today, altcoins such as Ether (ETH), Cardano (ADA), and Solana (SOL) have been on an outright breakout in recent years. weeks.
According to CoinMarketCap data, in the seven days prior to the time of writing this article, BTC recorded a 6.40% variation. Comparatively, altcoins have dwarfed these numbers, with SOL gaining 73.83%; ETH, 26.57% and ADA, rising 15.97% in the same duration. SOL and ADA have recently recorded new all-time highs also in September.
This altcoin boom has brought down the Bitcoin Dominance Index (BTCD) to 41.46%, as of press time, according to data from TradingView.com. This is similar to the levels it had reached in June 2018. The CEO of cryptocurrency exchange KuCoi, Johnny Lyu, told Cointelegraph:
“It is important to understand how ETH and other altcoins can compete with BTC for the money of new investors and how those who have been in the market for a long time can behave. […] Mass adoption of cryptocurrencies cannot be achieved without the prosperity of altcoins. Many market participants believe that at the current price level, it is the value of altcoins that is most prone to a multiple increase. “
Solana’s price, for example, has grown more than 100 times since the beginning of the year. Even PlanB’s upbeat S2F model for BTC predicts its value to be just over $ 100,000 by the end of the year, just three times the value of the token at the beginning of the year. These large differences in returns could even push investors to choose altcoins as an investment vehicle over Bitcoin.
However, institutional interest in Bitcoin is against the wind compared to the levels seen in June and July. Microstrategy made another purchase of BTC on August 24, this time worth USD 177 million. This equates to a total of 105,085 BTC, currently valued at $ 5.2 billion and is 0.5% of the maximum supply of 21 million BTC.
Even one of the world’s leading financial institutions, Citigroup Inc., is considering trading Bitcoin futures offered by the Chicago Mercantile Exchange, the world’s largest derivatives market.. According to the recent report, the banking firm is awaiting regulatory approval to trade this derivative instrument.
Lyu further spoke about how the growth of the cryptocurrency market as a whole is renewing institutional interest in the industry, stating: “The gradual recovery of institutional interest in cryptocurrencies is already obvious. Positive news about SpaceX’s investments in Bitcoin, the Ethereum network updates in August, and Cardano in September – all of this neutralizes the May-June bear market and strengthens market participants’ confidence in further growth. “
Wujastyk also suggested that the price movements that Bitcoin has made in recent months require the injection of large amounts of capital to move the market, indicating that institutional capital is definitely involved. This market momentum that currently exists for both Bitcoin and altcoins could be the differentiating factor leading to a historically dreaded month for the cryptocurrency market.