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If anything, the official implementation of bitcoin as a legal tender in El Salvador had bad timing for the market. Historically, September has not been the best of months when it comes to cryptocurrencies. Countless analyses had pointed to an impending crash after the market had rallied in August. The month of September has always been one of low momentum and it looks like even news as big as bitcoin being accepted as a legal currency by a sovereign nation would not be enough to change this.The Curse Of September
September has always shown very similar, almost identical, movements in bitcoin price. A look at bitcoin charts shows that the month has usually started out with a crash in price. Thus leading to the “September curse.” The crashes have always led to at least a 17% loss in value. Marking the start of a low momentum month as the price struggles to regain its footing in the market. There usually is a surge leading up to this crash. Ergo, the surge that happens in August. Then movement to exchanges shows a sell pressure, leading to a significant drop in price due to investors taking gains from the market.Related Reading | As Crypto Market Goes Into “Extreme Greed,” Is Bitcoin Set For New All-Time High?
A look through 2017, 2018, 2019, and 2020 shows the same trends that are happening now. The crashes happen in the same September time frame. The flash crashes drag the price of bitcoin into a stretch of struggling price movement. While also acting as a setup for the next rally.
Charts show similar trends in September |
Crucial One-Week For Bitcoin
The next seven days will prove to be the most crucial for the value of BTC following the flash crash. Previous iterations of the crash show a steady climb that leads to the development of a new line of support. This is evident in the upward corrections experienced by bitcoin for the past two days.Related Reading | New To Bitcoin? Learn To Trade Crypto With The NewsBTC Trading Course
Bitcoin will then form support above $47K, which would lead to a retest of its highs before the crash. Putting the next retest at $53K. Movement over the next seven days will determine if the market is at the start of the next bull or the beginning of a stretched-out bear market. Although history puts it that the market is poised for another bull rally following this crash. Ending in December with a slow down that will kick start the next bear market. Currently, the price of bitcoin is trading above $45K after dropping below $43K in the crash. Trading volume is down 32.24% in the past 24 hours, with a 2.36% drop in price.
BTC recovers following flash crash | Source:
Featured image from BTC Nigeria, charts from TradingView.com