Bitcoin price has seen a sideways move in recent weeks, although a volatility spike was seen in the last 24 hours. However, the cryptocurrency remains stuck as sentiment turns negative and more traders expect a new test of critical support.
At the time of writing, Bitcoin (BTC) is trading at $26,200 with a gain of 3% in 24 hours. The cryptocurrency posted a gain of 2% the week before and was the best performer in the crypto top 10 in terms of market capitalization.
Why is Bitcoin Price Likely to Retest Critical Support?
According to trading desk QCP Capital, the crypto market is about to enter its last quarter with a major option expiration event on September 29the. These events are often a source of high volatility, as major players hedge their positions, roll out contracts for future expirations, etc.
Additionally, the trading desk points to late September as days with a lot of confluence between macroeconomic forces and their Elliot Wave count, indicating bearish price action. The Elliot Wave indicator attempts to provide a price trajectory for an asset by taking into account market psychology and investor sentiment.
QCP Capital believes that Bitcoin is on the move and is likely to correct towards the $23,000 area to complete the trajectory corresponding to a Wave B, according to the Elliot Wave theory. The crypto trading desk declared:
Based on both blueprints, we expect an impending final decline to end the quarter on a low note (chart below). The crypto and macro events calendar is also consistent with this view, with a concentration of upcoming bearish events only turning neutral from mid-October onwards. This includes a likely higher than expected CPI tomorrow and a more aggressive than expected FOMC next week (…)
Furthermore, other bearish factors coincide with this potential bearish price action, such as the Mount Gox Bitcoin unlock and the event surrounding the failed crypto exchange FTX. The bearish trajectory could continue until mid-October this year, according to QCP Capital.
If the BTC price completes this trajectory, the market would have bottomed and Bitcoin could begin to recover from a long winter. The trading desk is more optimistic for the end of 2023 and 2024:
(…) Although our theory implies that there will be a bottom shortly after the supermoon early next month, we think the actual bottom will come in mid-late October, when the cycle of bad news has reached its end. Nevertheless, we remain bullish thereafter, through the end of the year and into the first quarter of next year.
Cover image from Unsplash, chart from QCP Capital and Tradingview