Bitcoin [BTC] and the wider cryptocurrency market are in the process of bouncing back from a decline that has persisted over the past five months, following the conclusion of the cycle in March.
Despite a decrease in general interest in the cryptocurrency markets compared to previous cycles, current price levels are reminiscent of those witnessed in 2021, a period when the market underwent a significant drop before experiencing a notable surge.
The number of active contracts for BTC is significantly higher compared to 2021, indicating the potential for price appreciation if market conditions improve.
Although the decline has already taken place, the question remains whether Bitcoin will reproduce the success of Q4 2021 with a comparable surge in late 2024.
Bitcoin CME Trading Activity
The trading activity of Bitcoin on the Chicago Mercantile Exchange (CME) is a critical chart to monitor, especially in the current era of Bitcoin ETFs.
These ETFs track the price of BTC on the CME, as opposed to spot Bitcoin. Presently, the CME chart indicates that BTC is following a descending broadening wedge pattern, a bullish sign.
Furthermore, Bitcoin has regained its 200-day simple moving average, a significant indicator of market resilience.
If a gap on the chart remains unfilled, it could signify the second occurrence since the market’s overall low point that BTC avoids filling such a gap, bolstering bullish sentiment.
Estimated Margin Trading Ratio
Furthermore, data from CryptoQuant shows that the estimated margin trading ratio across cryptocurrency exchanges has reached a new high for the year.
Such an increase indicates that Bitcoin traders are progressively taking on more risk, potentially signaling a bullish trend.
When traders are willing to take on greater risk with BTC and other cryptocurrencies, it commonly leads to higher prices if the market trend confirms an upward trajectory. The elevated risk appetite might attract more capital into Bitcoin, propelling its price upwards.
Bitcoin Historical Monthly Returns
Moreover, historical data indicates that August and September have typically been the weakest months in terms of returns for Bitcoin, with both months showcasing the lowest average returns since 2010.
Despite this trend, traders who can weather what some refer to as “Rektember” might anticipate a more positive “Uptober,” historically associated with stronger returns for Bitcoin, as evidenced in previous years.
If history repeats itself, Bitcoin’s price may witness an upsurge in the final quarter of 2024.
Profit-Taking by Bitcoin Whales
Nonetheless, not all recent developments are entirely optimistic. Some BTC whales are beginning to cash in on profits, exemplified by a whale depositing 119 BTC, valued at $7.14 million, to Binance for profit realization.
This particular whale has withdrawn a total of 3,409 BTC, worth $195.4 million, from Binance since December 2023, at an average price of $57,319.
The whale has already pocketed $10.5 million in profits, which could potentially serve as a bearish signal if more whales opt to do the same.
Yet, the long-term outlook remains positive as prominent industry players continue to show their support for Bitcoin.