The Bitcoin price shows weakness after a new sharp deviation from the resistance level of $ 11,000. When bitcoin (BTC) enters the fourth quarter, market sentiment is generally cautious and neutral.
Bitcoin may face a major decline in the fourth quarter due to several important factors. For the last three years, the candlestick in September has closed in red. The monthly candlestick in September 2020 is also nearing the end of the red candlestick, which indicates that there is no trend.
From March to August, favorable economic conditions, low interest rates and a multi-billion dollar stimulus package pushed bitcoin and stock prices at the same time. In the coming months, due to the US presidential election in November, the probability of delaying stimulus approval will increase. Increasing uncertainty about the overall landscape and US financial markets may put pressure on BTC.
Traders are usually cautious in the short term and optimistic in the medium to long term. Technical analysts have identified the major price levels for BTC as $ 9,800, $ 10,700 and $ 11,800. As long as Bitcoin remains in the $ 9800-10700 or $ 10700-11800 range, volatility is expected to decline. So while traders are skeptical of Bitcoin’s trend in the near future, not many are expecting a big fall.
As a potential area of interest, traders are looking at the $ 9600 CME gap that is formed when bitcoin rises or falls below the market price of CME bitcoin futures after closing on weekends or holidays. The $ 9,600 gap has not yet closed, and given the trend of most CME holes closing, this level remains a target.
Short-term bearish structure
Bitcoin’s monthly candle is expected to close below $ 11,000, confirming the September red light. In technical analysis, if a new candlestick is closed without closing the previous one, it is called a “bearish engulfing”.
In addition, Bitcoin’s monthly outages will occur after a re-failure because BTC has registered four consecutive declines in the daily chart since 17 August. A low-high formation occurs when the last height is below the previous height. In this case, the Bitcoin price reached $ 12,468, $ 12,050, $ 11,179 and $ 10,950, respectively.
Bitcoin faces two bearish technical patterns and structures on monthly and daily charts. Both time frames are considered high time frames in technical analysis, which may increase the probability of withdrawal in the short term.
On September 28, the bitcoin price briefly broke the resistance level of $ 10,800. But a pseudo-trader known as “the Byzantine general” said it was most likely a bull trap. Bitcoin rose to $ 10,950 on major stock exchanges, but embraced resistance. When BTC struggles to break through an obviously high level of resistance, the chances are high that the catcher is a bull.
Bitcoin’s recent fall from $ 10,950 indicates a move away from monthly, daily and hourly time frames, as it shows cautious / bearish structures in the short term. When this coincides with the end of the monthly candlestick, it may intensify the downturn in the near future.
Historic BTC performance in Q4
Historical BTC figures indicate a downward trend, as BTC has seen a decline of 42.46% and 13.59% respectively in the last two consecutive quarters. Given the poor performance of BTC in the fourth quarter over the past two years, the chances of a slow fourth quarter remain high.
But after halving in 2016, BTC performed well in the fourth quarter, recording an increase from $ 613.98 to $ 998.33. BTC is currently in a post-war cycle, and if it follows previous trends, it could see a gradual increase over the next 12 months. During the half-year period in 2016, it took BTC 15 months to reach the top of $ 20,000, which is still a full-time high.
Unstable financial market
The US stock market continued to decline over the past month due to the COVID-19 pandemic. Concerns about the second wave were exacerbated by a lack of stimulation and uncertainty surrounding vaccines. The stimulus package will ease the pressure on the economy and distribute direct controls to individuals, and increase overall market liquidity.
However, bitcoin, gold, equities and risky assets entered the fourth quarter without incentives and with an increasing number of COVID-19 cases, and due to the election in November, Washington was in limited mode. House Democrats are reportedly preparing a $ 2.4 trillion proposal with direct payments. It is still unclear whether it will be approved before the presidential election.