Following a positive close in September, Bitcoin (BTC) and the overall market experienced a significant downturn as October commenced. The leading cryptocurrency experienced a 7% drop, contributing to a pessimistic outlook among investors. Nonetheless, many analysts continue to express confidence in BTC’s prospects for the upcoming three months.
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Is This The ‘Shakeout Before Breakout’?
The market entered October, often referred to as “Uptober” in the crypto world, with a notable shakeout, shedding 6.5% of its market capitalization. A significant number of cryptocurrencies within the top 100 experienced substantial price declines, despite showing some green in both daily and weekly timeframes.
Leading the decline was Bitcoin, the largest cryptocurrency by market capitalization, which saw its value plunge below the $61,000 support level, a range not witnessed for nearly two weeks. Geopolitical tensions in the Middle East appeared to exacerbate the situation, coinciding with reports of an Iranian missile attack on Israel.
This news triggered a selloff among investors, halting the BTC spot Exchange-Traded Funds (ETFs) 8-day inflow streak and resulting in over $526 million in liquidated leveraged positions within a 24-hour period.
However, many market observers remain undeterred by the recent shakeout, emphasizing that the month has only just begun. In a series of posts on X, crypto analyst Jelle pointed out that Bitcoin has historically initiated its second upward leg during October in previous bull markets.
He elaborated that BTC’s price typically begins to break out in the second or third week of the month, suggesting that the initial week’s retracement could constitute the “final shakeout before reaching new highs.” Furthermore, he highlighted that the flagship cryptocurrency recently achieved its first higher high in six months and reclaimed the critical resistance level above $60,000.
Jelle also mentioned that BTC established a higher low on October 1 by holding the $60,000 support zone and reaffirming its strength above the $61,000 level. The analyst believes that “It’s time for this descending broadening wedge to start playing out,” reiterating his prior target of $90,000.
Analyst Warns About Bitcoin ‘Fifth-Day Plunge’
Other analysts have also shared their insights regarding the market shakeout. Altcoin Sherpa noted that “the last time we encountered this level of compression with 1d EMAs was September 2023, just prior to the market surging.”
Conversely, DonAlt presented a more cautious view, suggesting that Bitcoin’s situation could appear “much worse” given the current scenario, but recommended waiting for the weekly close to draw conclusions.
Nonetheless, trader Daan Crypto Trades pointed out that Bitcoin has “bottomed/topped consistently at roughly the same time” since June. According to his post, on the fifth day of each month, BTC’s price has exhibited a notable correction, except in September, when it occurred on the sixth day.
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Throughout the Q3 downturns, BTC consistently showed daily red candles preceding the fifth-day plunge. The cryptocurrency witnessed a 16.3%, 25%, and 11% drop in July, August, and September, respectively, from the beginning of each month up until the conclusion of the first-week shakeout.
Should the pattern persist this month, investors may observe BTC’s price falling below the recently regained $60,000 support level and testing the stability of lower foundational support zones. However, this would also imply that the leading cryptocurrency could potentially rebound by the start of the second week.
As of now, BTC is trading at $61,466, reflecting a 2% decrease in the past 24 hours.
Featured Image from Unsplash.com, Chart from TradingView.com
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