Bitcoin (BTC), which has struggled to surpass the $50,000 mark since 10 days ago, is now on track. The premium cryptocurrency, Bitcoin (BTC), reached the milestone briefly on Sept. 2. This sent positive ripples throughout the market. The token traded in the $49,000 to $49,000 range, before rebounding to reach the $50,000 mark on Sept. 3.
Bitcoin behaves in a cyclical fashion so a look at September’s monthly trends could help you to see patterns in the price. This could then be used to predict the future. September has historically been one of the most disappointing months for Bitcoin. The monthly price data from 2013 shows that the token has experienced positive gains in September twice, in 2015 and 2016, with a maximum of 6.6%. This could be considered almost flat.
Cointelegraph spoke with Pete Humiston, Kraken Intelligence’s manager — the research section of Kraken Exchange — about the implications of this trend for the year.
“September is historically Bitcoin’s worst performing month. It has been hovering around $50,000 for the last three weeks. If Bitcoin can surpass this psychologically significant milestone it could rekindle investor interest and ignite the momentum to take it back to $60,000
BTC’s September performance has been negative in four of five years. This makes it the worst period for the currency. The $50,000 resistance level is still a significant barrier for this asset. It was broken just days after Tesla CEO Elon Musk announced that they had purchased BTC in a value of $1.5 billion and started accepting Bitcoin payments. This could be a positive sign that the token has briefly surpassed this resistance level in the beginning of the month.
Cointelegraph spoke to Hunain Nayer, senior analyst at OKEx Insights — a research team for cryptocurrency exchange OKEx — about the current situation. He stated, “As it stands today, BTC’s struggle below $50,000 is the big fight that bulls must win before we can view $60,000.” It is possible that the move from $40K to $50K will be faster than the move between $50K and $60K.
S2F model sees lesser deflection
Twitter user PlanB’s stock to flow (S2F), model is one of the most accurate and reliable quantitative models available that attempts to forecast the Bitcoin price. This model is based on the amount of asset that has been put into circulation over a period. The model predicts that Bitcoin’s price will have risen to around $105,000 by the time it reaches the $100,000.
BTC is now recovering from the larger deflection at S2F’s July 31st when it appeared that the model might be invalidated. This is not the first instance of Bitcoin’s price deviating from the model. The deviation started at the end October 2018, and continued until mid-June 2019, for nearly seven months. The current negative variation, however, has been in place for only three months. Notable is the fact that the S2F model remains flat for the remainder of the year and predicts a similar range in the fourth quarter.
Naseer also discussed the model’s forecasts with respect to the market price. He stated, “Given current sentiment and long term fundamentals, it’s not out of the question that BTC will hit $100K by December. Especially since October and November are historically big months for Bitcoin. It could be set up to reach $100K by mid December without any corrections.
Jake Wujastyk (chief market analyst at TrendSpider), told Cointelegraph that this model is based on the measured move between the March 2020 low and the October 2020 candle (seven month), so applying this measured move towards the June 2021 lowest would bring this to around $100,000 by year’s end, assuming that the move is the exact same.”
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Although the S2F model is highly accurate at forecasting Bitcoin’s price, it is important that you recognize that technical indicators can have limitations. Humiston spoke out more about the wider perspective of the cryptocurrency market and stated that “a move to $100,000 within four months would require significant capital inflows.” Although it is possible, it seems unlikely now that investors have turned their attention to other crypto assets like Ether, Cardano, and Solana.
The ltcoin boom could prevent $100K BTC in this year
Bitcoin is slowly moving towards the $50,000 mark, but altcoins such as Ether (ETH), Cardano(ADA) and Solana [SOL] have been on an absolute tear over the past few weeks.
According to CoinMarketCap data, BTC posted 6.40% in the seven days prior to the writing of this article. Altcoins, however, have outperformed these numbers with SOL posting 73.83% and ETH posting 26.57% respectively, while ADA posted 15.97% over the same time period. SOL and ADA both recently reached new highs in September.
According to TradingView.com data, the Bitcoin Dominance Index (BTCD Index) has fallen to 41.46% as a result of the altcoin boom. It is now at levels similar to those it reached in June 2018. Johnny Lyu, CEO of cryptocurrency exchange KuCoi, said to Cointelegraph:
“It is crucial to understand how ETH, other altcoins, and BTC can compete for the money from new investors. It is also important to understand how long-standing traders can behave […] Crypto mass acceptance cannot be achieved without altcoins. Market participants believe that altcoins’ value is more susceptible to multiple increases at the current price.
For example, the price of Solana has increased more than 100 percent since the start of the year. PlanB’s S2F model of BTC predicts that it will be worth just over $100,000 by year’s end, which is only three times what the token was worth at the start of the year. Investors may choose altcoins over Bitcoin because of the vast difference in returns.
The institutional interest in Bitcoin is growing, however, compared to the levels in June and July. Microstrategy purchased another bitcoin on August 24, worth $177 million. The total amount of 105,085 BTC is currently valued at $5.2 Billion. This represents 0.5% of the 21 million BTC supply.
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Citigroup Inc. is considering trading Bitcoin futures from the Chicago Mercantile Exchange. This exchange is the largest in the world and one of the most recognizable financial institutions. According to a recent report, the bank is still waiting on regulatory approval to trade this derivatives instrument.
Lyu also spoke about how the rise of cryptocurrency markets as a whole renews institutional interest in the sector, saying, “The gradual recovery in institutional interest is already evident.” SpaceX’s investment in Bitcoin and the Cardano network upgrades in September of Ethereum and Cardano in August are positive news. This neutralizes the bear markets of May and Juni and increases confidence among market participants for further growth.
Wujastyk suggested that Bitcoin’s price movements over the past few months required large capital injections to propel the market. This indicates that institutional capital is certainly involved. The market momentum for Bitcoin and altcoins is what could make this a historically scary month for cryptocurrency markets.