Bitcoin has experienced a significant recovery from its July low of around $58,000, climbing above $86,000. This nearly 47% increase from its low point has strengthened investor expectations of a new uptrend, although there is a possibility that $BTC may retest its previous lows.
At this point, a notable warning came from Binance Research.
According to a recent report by Binance Research analysts, in a significant portion of past movements similar to Bitcoin’s current recovery, the price has retested its previous lows in a short period of time.
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Binance Research examined periods where Bitcoin rose at least 40% from its cyclical lows but remained at least 25% below its previous all-time high.
Seven similar events were identified between 2011 and 2023. Two of these seven similar events occurred during periods when Bitcoin experienced sharp declines of 75.5% and 67.1% from its peak.
While the recovery experienced by $BTC in these two examples was permanent, in four of the remaining five examples, Bitcoin retested its previous low within 43 days. According to Binance Research, the only exception to this occurred in July 2021.
According to Binance Research, the current signal emerged on September 3rd, when Bitcoin was 35.6% below its previous peak. This level coincides with a shallower dip range of 30-38%, where recoveries have mostly failed in the past. This could indicate that a recovery is risky, suggesting a retest of $BTC’s previous low.
Binance believes that the forced selling pressure following the deep declines may have largely ended, creating a healthier foundation for recovery. In shallower declines, however, the fact that selling pressure has not completely subsided can make the uptrend more fragile.
All Eyes on October!
Binance Research specifically emphasizes that this is merely a probability assessment based on historical data and not a definitive price prediction.
Analysts say October will be the next test for Bitcoin, noting that October has historically been a strong month for Bitcoin, which could be a supporting factor for the current rally. According to Binance, a potentially strong performance in October could support a continuation of the recovery, while weak price movements might indicate that the rally lacks sufficient momentum.
*This is not investment advice.
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