- Bitcoin’s rebound from the decline mirrors 2016’s bull run patterns.
- RSI and Bollinger Bands suggest a potential price correction or a shift to the bullish trend.
On August 5, Bitcoin [BTC] saw the biggest daily drop since the FTX collapse, down more than 16%.
This steep decline was part of a broader crypto trajectory, with nearly 90% of altcoins also suffering double-digit losses, signaling a serious industry-wide downturn.
Bitcoin bounces back after the dip
Despite this dramatic slump, BTC has rebounded strongly, making a remarkable recovery with an 8% gain in the last 24 hours and a price of $54,791 per year. CoinMarketCap.
While Many Remain Cautious Amid Bitcoin’s Increased Volatility, Says Veteran Trader Pieter BrandT notes that BTC’s recent decline since the April 2024 halving resembles market patterns observed before the 2016 bull run.
As he went to X he noted:
“Note that the drop in $BTC since the halving is now comparable to that of the 2015-2017 Halving Bull market cycle.”
Source: Peter Brandt/X
For perspective, in 2016, Bitcoin fell 27% from the price halving before surging to new highs.
With a similar 26% decline from the recent price halving, this pattern could indicate the potential for significant gains in the future, mirroring the previous bull run.
What are the technical indicators trying to tell us?
However, despite BTC’s recent price surge, concerns remain as the Relative Strength Index (RSI) stands at a low 29, indicating that sellers still dominate over buyers.
After a dramatic 16% drop, Bitcoin entered the oversold zone. Historically, such oversold or overbought conditions often indicate price corrections.
This view is reinforced by the widening Bollinger Bands, which indicate increased volatility and a possible shift from a bearish to a bullish trend.
Source: trading view
Bitcoin’s on-chain metric analysis
To further reinforce the upcoming bullish trend, AMBCrypto analyzed IntoTheBlock data and found that a significant majority (78.50%) of BTC holders held tokens valued higher than their purchase price at the time of writing, indicating that they were ‘in the money’.
In contrast, a smaller segment (20.69%) owned BTC tokens that were worth less than their purchase price, putting them ‘out of the money’.
Source: IntoTheBlock
This suggested bullish sentiment or a possible upcoming price increase for BTC. ‘The Bitcoin Therapist’ said it best when he said:
Source: The Bitcoin Therapist/X