Bitcoin (BTC) Price Forecast: Potential Correction to $61K After Hitting $65K in Bullish Rally

bitcoin‘s performance in the third quarter has been relatively stagnant, standing at a modest 0.91% after a 3.5% drop on September 30. As October begins, many in the cryptocurrency community anticipate a bullish trend, hoping for a strong start to the fourth quarter. Reflecting these sentiments, Bitcoin has seen a 1.2% increase today, trading at approximately $63,700. Investors are now keenly watching to see what the future holds for btc.

The rally of Bitcoin to $65,000 can be attributed to several factors. Over the past seven months, Bitcoin’s price has displayed cyclical patterns, with local peaks and troughs forming consistently in the first and third weeks of each month. This cyclical nature is evident in the recent movements of Bitcoin’s price.

Following a sharp 10% decline in the first week of September, Bitcoin hit a local bottom on September 6. This marked the beginning of a 27% rally that propelled the price to $65,000. The reasons behind this significant upward movement are twofold. Firstly, the U.S. Federal Reserve’s decision on September 18 to implement a 50 basis point rate cut provided a substantial boost to the market. Secondly, the Chinese central bank’s rate cut and stimulus package further fueled the rally. This combination of favorable macroeconomic policies contributed to the surge in Bitcoin’s value.

Interestingly, the Chinese central bank’s actions also led to the largest single-day rally in the stock market since 2008, highlighting the interconnectedness of global financial markets.

Despite Bitcoin’s recent gains, its strong recovery remains in question. Historical data indicates that Bitcoin tends to perform well in the fourth quarter. Over the past 13 years, October has been the third best-performing month for Bitcoin, with an average return of 26%. Additionally, the fourth quarter is typically the best-performing quarter, boasting an average return of 81%.

However, investors should exercise caution. The seven-month consolidation pattern suggests that local tops and bottoms typically form at the end of the third and first weeks of each month. Out of the last eight local tops, four were formed in the third week and two in the first week. If this pattern holds, it is possible that Bitcoin has already reached a short-term peak, and a correction may be on the horizon.

Supporting this potential correction is the sell signal from Santiment’s 30-day Market Value to Realized Value (MVRV) Ratio indicator. This metric tracks the average profit or loss of investors who purchased Bitcoin over the past month. A high positive MVRV ratio indicates unrealized profits and often serves as a sell signal. In the current consolidation phase, local tops have typically formed when the MVRV ratio hits between 4% and 8%. As of October 1, the MVRV ratio has retracted from 8% to around 4%, suggesting a possible correction.

Given the technical indicators, a short-term correction seems likely. However, this potential downturn may offer a valuable opportunity for sidelined buyers to enter the market. A correction would not necessarily undermine Bitcoin’s long-term bullish outlook. The current market scenario suggests that Bitcoin could revisit the $61,500 support zone before resuming its upward trajectory.

From a short-term perspective, Bitcoin appears poised for a correction. Nonetheless, this retracement is not entirely bearish. It could provide an opportunity for new buyers to accumulate Bitcoin at lower prices. Moreover, this correction does not negate the long-term bullish thesis for Bitcoin, which predicts a six-digit all-time high by October 2025.

Analyzing the daily Bitcoin chart reveals two potential scenarios. The first scenario involves a sweep of the sell-side liquidity below $62,000, leading to a continuation of the uptrend. The second scenario envisions a deeper correction toward the support zone between $61,500 and $60,000.

Despite the potential short-term setbacks, the long-term outlook for Bitcoin remains bullish. As the seven-month consolidation phase nears its end, several factors could drive significant price movements in the fourth quarter of 2024. These include the anticipated soft-landing by the U.S. Federal Reserve and the conclusion of the U.S. presidential election. Both events could introduce substantial volatility, potentially leading to a retest of Bitcoin’s all-time high at $74,000.

In summary, while Bitcoin’s recent performance and historical data suggest a bullish outlook for the fourth quarter, investors should remain cautious. The potential for a short-term correction exists, but this could also present a buying opportunity for those looking to invest in Bitcoin. The long-term prospects remain promising, with significant price movements expected in the coming months.