Traditionally, September has been a lackluster month for Bitcoin and various other assets. Conversely, October usually signals a bullish period, with Bitcoin [BTC] showcasing positive performance in 8 out of the past 9 Octobers.
On average, BTC typically records a 22.9% increase during this month. This historical pattern could explain the ongoing buying activity in the options market.
While the overall liquidity within the global crypto market is on the rise, a significant portion remains unallocated. A considerable amount of this capital is presently held in stablecoins, awaiting deployment to impact the BTC price.
Once this untapped “firepower” enters the market, it has the potential to instigate a substantial movement.
Bitcoin Engages in Period of Consolidation
Bitcoin has remained range-bound for the past month, indicating a period of consolidation which typically precedes a significant breakout in either direction.
A potential solid downward movement for Bitcoin could signal the completion of its current cycle, potentially paving the way for a robust rebound. On the weekly timeframe, some weakness is observed, which may not align perfectly with the expectation of Bitcoin achieving new highs in October.
Nevertheless, there is still room for this scenario to materialize. The crucial factor is for Bitcoin to break out of its current consolidation without hesitation.
When the capital currently held in stablecoins flows into Bitcoin, the price may breach the existing range and potentially continue the current bullish trend.
Bitcoin’s Growth Potential
The MVRV Z-Score, currently positioned around 1.8, indicates a moderately optimistic market sentiment without reaching an extreme level.
This score suggests that while Bitcoin still has potential for further growth, caution is advisable to prevent the market from becoming overvalued as the score advances.
With a 1.8 reading, the ongoing cycle seems far from its conclusion and might just be commencing. As BTC price climbs, meticulous monitoring of this score is crucial as it could present early signals of a market peak.
Short to Medium Term Open Interest
In the short to medium term, the open interest (OI) remains relatively high, posing a potential obstacle to sustainable upward movement. An OI reduction of approximately 10% would support a healthier market environment.
Recently, the OI underwent a reset after a short-term increase during the latest drop, bringing the BTC price back to its initial position.
This reset is a positive indicator as it diminishes the likelihood of a major market downturn and enhances the possibility of continued range-bound trading on shorter timeframes. Improved market conditions could trigger a surge in Bitcoin’s price.
HODL Cycles and Periodicity
The Redistributed Revenue Ratio, which examines long-term holder behavior against Proof of Work incentives, illustrates a discernible pattern of HODL cycles.
When adjusted with the Spent Output Profit Ratio (SOPR), the ratio stands at around 1.5, indicating that Bitcoin has yet to peak.
With the continuous growth in global liquidity and the eventual allocation of stablecoins to Bitcoin, a substantial price surge could be on the horizon.
Bitcoin is poised to be a significant beneficiary once this trapped capital enters the market, potentially driving BTC price to new heights.