Bitcoin Goes Through Usual Summer Downturn Can It Bounce Back in Q4 2024

Bitcoin Enters its Typical Summer Slump
CoinChapter.com Reports


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NAIROBI (CoinChapter.com)— Bitcoin is currently experiencing a dip in its price below its bull market support band (BMSB), which has raised concerns about its potential for a Q4 rally. This pattern has been observed in previous years. Analyst Benjamin Cowen recently discussed this trend in a post on X.


Cowen shared his analysis in a thread on X. Source:
Benjamin Cowen
Cowen emphasized the importance of Bitcoin regaining its position relative to its BMSB in the coming weeks, following the recent crash in BTC price. He compared this to past cycles, specifically looking at the summers of 2013 and 2023, where Bitcoin’s recovery led to significant price rallies.
In 2013, Bitcoin reached its lowest point in early July before surging above the 21-week EMA and rallying in Q4. Similarly, in 2023, BTC price followed a similar pattern, dropping below its BMSB in August before staging a strong comeback in the final quarter.


The analyst sees confirmation of a reversal in BTC’s RSI and Bullish Hammer. Source:
Jacob Canfield
Jacob Canfield pointed out bullish signals from Bitcoin’s Relative Strength Index (RSI), highlighting oversold bullish divergences on the daily chart as high-probability trade setups. He also predicts a potential return to Bitcoin’s former range high of over $70,000 if the token reclaims the daily trend.


Bitcoin’s high volatility indicates a historical upward trend
Another independent analyst
highlighted
that the Bitcoin Volatility Index suggests that high volatility phases often precede the second phase of a bull market. When the Volatility Index enters a high volatility territory, it typically signals the start of significant bullish momentum.
Optimism Increases with Rate Cut Expectations
Rising expectations of an interest rate cut further contribute to Bitcoin’s potential for a bull run in the coming weeks. According to CME data, as of July 8, Wall Street traders saw a 93.3% possibility of the Federal Reserve cutting interest rates by 25 basis points in September.
A month ago, the probability was less than 50%. The expectations for lower interest rates have risen due to a slowdown in hiring in the United States.


Fed meeting target rate probabilities. Source:
CME
When the job market weakens, the Federal Reserve often considers cutting interest rates to stimulate economic activity. Lower interest rates are generally positive for Bitcoin and other riskier assets because they make traditional safe investments like US Treasury Notes less attractive.
The potential shift in monetary policy could provide additional support for Bitcoin’s recovery.
Bitcoin Struggles Below $56,550 Support Level
On July 5, Bitcoin dropped below the $56,552 support level but quickly rebounded as bulls bought the dip and managed to defend the level on a closing basis. However, bears may attempt to drive the price below this level again.
If successful, the BTC/USDT pair could slide to $53,480 and potentially find solid support at $50,000. On July 8, Bitcoin’s price spiked over 7% to reach a daily high near $58,200 before correcting. This correction demonstrates the strong presence of bears near the upper price levels.


BTC/USD 1-day price chart. Source:
TradingView
The downwards sloping 20-day exponential moving average (EMA) near $61,230 indicates an advantage for the bears. However, the positive divergence on the relative strength index (RSI) suggests that bearish momentum might be slowing down.
Buyers will need to push the price above the 20-day EMA to maintain the range-bound action between $56,550 and $73,780.


Bitcoin On-chain Indicators. Source:
CryptoQuant
The aSOPR at 1.0019 indicates slight profit-taking, potentially signaling a market top. However, the Binary CDD value of 0.42857142 suggests that long-term holders are retaining their coins, possibly anticipating future gains.