Is Bitcoin at Risk of Falling to $42K? A Worrying Outlook

A couple of days can make a significant impact, shifting from the bullish momentum of ‘Uptober’ to cautious bearish forecasts.

Bitcoin experienced a decline of approximately $4,000 following the Iranian missile strike on Israel, restoring negative sentiment across crypto social media platforms.

Nonetheless, taking a broader perspective reveals that BTC remains in its established range-bound channel, a trend that has persisted for the past six months.

Is a Drop to $40K Likely?

On October 2, ITC Crypto founder Benjamin Cowen portrayed a rather bleak scenario, referencing historical price movements post-Federal Reserve interest rate cuts.

In 2019, Bitcoin saw a two-week rally after the initial rate cut, but subsequently plummeted to the 100-week moving average in the ensuing months.

If history repeats itself, a drop to that technical benchmark could see BTC’s price hovering around $42,000 by mid-November, according to him.

Just to provide an alternative perspective to the prevailing “up only” narrative shared on this platform, in 2019, #BTC surged for two weeks post the first rate cut, then fell to the 100W SMA two months later, equating to mid-November. pic.twitter.com/ogicF89JrM

— Benjamin Cowen (@intocryptoverse) October 2, 2024

However, one must note that 2019 was in the midst of a bear market, and it wasn’t a halving year, which significantly alters the context.

Still, other analysts echoed similar sentiments but lacked solid reasoning, later labeling it as a ‘shitpost.’

This was the $BTC test dump for 40k. Bearish. pic.twitter.com/vbmszAMHmb

— Altcoin Sherpa (@AltcoinSherpa) October 1, 2024

As market analyst Miles Deutscher highlighted in a post on X on October 1, numerous factors support a bullish outlook.

Expansion in global liquidity via M2 money supplies, interest rate reductions that generally favor riskier assets, China’s economic stimulus initiatives, an impending US election with crypto as a focal point, and the historically positive trajectory of crypto in Q4 are some of these factors.

On October 2, ‘Ash Crypto’ stated to his 1.1 million followers on X that what we are witnessing is “a significant shakeout.” He mentioned that October would likely start with a drop, followed by a sideways movement for the majority of the month before an upward trend begins.

Decline in Miner Profitability

Despite this, Bitcoin miners might have reasons to adopt a bearish stance. According to analysts at JPMorgan, Bitcoin mining profitability reached a recent low in September.

The gross profit from daily block rewards fell 6% month-over-month in September, representing the third consecutive month of decline. This reduction in revenue has been primarily linked to the Bitcoin halving event that took place in April. Moreover, transaction fee revenue for that month totaled just $13.86 million, as observed by Colin Wu.