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Despite September’s green close, Bitcoin (BTC) and the rest of the market suffered another bloodbath at the start of October. The flagship crypto saw a 7% decline, fueling bearish sentiment among investors. However, most analysts remain optimistic about BTC’s performance over the next three months.
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Is this the ‘shakeout before the outbreak’?
The market started the month of October, popularly known as ‘Uptober’ by the crypto community, with the first shakeout of the quarter, losing 6.5% of its market capitalization. Most cryptocurrencies in the top 100 saw significant price declines, with green numbers being recorded in the daily and weekly time frames.
The bleeding was led by Bitcoin, the largest cryptocurrency by market capitalization, as its price fell below the $61,000 support zone, a range not seen in nearly two weeks. Geopolitical conflicts in the Middle East have seemingly fueled the downturn, as the decline followed news of an Iranian missile attack on Israel.
The news sparked a sell-off among investors, halting an 8-day influx of BTC spot exchange-traded funds (ETFs) and leading to the liquidation of more than $526 million in leveraged positions in the past 24 hours.
Nevertheless, many industry observers remain unfazed by the market shock, noting that the month has only just begun. In a series of X-posts, crypto analyst Jelle says be shows that Bitcoin started its second leg higher in October of the last bull years.
He explained that BTC’s price historically breaks out in the second or third week of the month, so the first week retrace could be the “final shakeout before new highs.” Furthermore, he highlighted that the flagship crypto recently hit its first higher high in 6 months and regained the key resistance level above $60,000.
Jelle also noted that BTC made a higher low on October 1, holding the $60,000 support zone and testing its strength above the $61,000 mark again. The analyst considers that “it’s time for this falling, widening wedge to manifest,” reaffirming his previous target of $90,000.
Analyst Warns of Bitcoin ‘Fifth Day Plunge’
Other analysts also shared their thoughts on the market shock. Altcoin sherpa marked that “the last time we saw this much compression with 1d EMAs was September 2023, right before the market skyrocketed.”
Meanwhile, DonAlt was more cautious approximationstating that Bitcoin could look “much worse” given the circumstances, but suggesting that waiting for the weekly close would be the best way to wrap up.
Nevertheless, trader Daan Crypto Trades pointed out that Bitcoin has “basically bottomed/topped at the same time” since June. According to the post, BTC’s price has undergone a massive correction on the fifth day of every month except September, when it occurred on the sixth day.
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During the third quarter retracements, BTC recorded daily red candles prior to the fifth day plunge. The price recorded declines of 16.3%, 25% and 11% in July, August and September from the start of each month until the end of the first week’s shakeout.
If the pattern were to repeat this month, investors could see BTC’s price fall below the recently reclaimed $60,000 support level and test the strength of lower key support zones. However, it would also mean that the flagship cryptocurrency could potentially recover at the start of the second week.
At the time of writing, BTC is trading at $61,466, down 2% in the past 24 hours.
Featured image from Unsplash.com, chart from TradingView.com