Bitcoin slips below $64,000 after last week’s rally

• Bitcoin falls below $64,000, erasing most of the previous week’s gains.
• Coinbase’s weekly report anticipates a constructive fourth quarter for Bitcoin due to lower US interest rates and China’s supportive economic policy.
• Historically, October has been strong for Bitcoin, often leading to gains in the fourth quarter.

Bitcoin (BTC) is trading below $64,000 on Monday after a 3% gain last week. On-chain and historical data points to strong potential for October and a positive fourth quarter, as shown in Coinglass and Coinbase’s weekly report, which cites the recent US rate cut and supportive policies in China that could support risky assets such as Bitcoin. Additionally, growing institutional demand for US spot Bitcoin exchange-traded funds (ETFs) suggests a potential rally ahead.

Bitcoin performs best in the fourth quarter and October

Monthly returns and quarterly Bitcoin historical data from Coinglass show bullishness about the price of Bitcoin. Bitcoin had generally positive returns for traders in October, averaging 22.9%. More broadly, the fourth quarter data showed a generally positive trend, with an average of 88.84%. Q4 will be important for the largest cryptocurrency as the upcoming US election in November with favorable conditions could propel the price of Bitcoin.

Bitcoin Monthly Returns Chart (%)

Bitcoin Quarterly Returns Chart (%)

Coinbase, the largest US cryptocurrency exchange by trading volume, released its latest report on Friday. The report, written by David Duong, head of institutional research, and David Han, institutional research analyst, anticipates a constructive fourth quarter due to US interest rate cuts and significant fiscal and monetary stimulus in China. Both factors should boost market liquidity and support BTC’s performance, analysts say.

“The SEC’s approval of options on the iShares Bitcoin Trust is a positive sign. These options could improve institutional adoption and liquidity,” the report said, adding that Bitcoin and high-beta crypto assets have a strong overall outlook for the market in the coming months.

Institutional flows into BTC increased last week compared to the previous week. Inflows into U.S. spot Bitcoin ETFs increased from $397.20 million to $1.10 billion from the third to fourth week of September, according to Coinglass data. This sudden increase in inflows suggests that institutional investors have confidence in Bitcoin.

Bitcoin Spot ETF net flow chart

Ki Young Ju, founder and CEO of CryptoQuant, an on-chain data and analytics company, tweeted that Bitcoin is “in the middle of a bull cycle.

“Its market cap is growing faster than the actual cap, a trend that typically lasts around two years,” he said.

This is generally a positive sign for Bitcoin, and if this pattern continues, the bull cycle could end by April 2025.

However, Coinglass’ Bitcoin long-short report highlights the possibility of a near-term correction for Bitcoin. The ratio stands at 0.91, the lowest level this month. This report reflects bearish sentiment in the market, as a number below one suggests that more traders anticipate the asset’s price to decline.

Bitcoin long-short ratio chart

Technical Analysis: Bitcoin is facing a short-term correction

Bitcoin price broke through the consolidation zone between $62,000 and $64,700 on Thursday and rose 1% over the next two days. However, it faced rejection around the psychological level of $66,000 on Saturday and fell slightly the following day. As of this writing on Monday, it continues to trade below $64,000.

If BTC breaks and closes above the $66,000 level, it could rise 6% to retest the July 29 high of $70,079.

The Relative Strength Index (RSI) on the daily chart has dipped slightly and is currently pointing lower, trading at 56, indicating a slowdown in bullish momentum. For Bitcoin to continue its rally, the RSI would need to rise above 60 again for the bullish momentum to be sustained.

BTC/USDT Daily Chart

However, if BTC breaks and closes below the consolidation zone around $62,000, it could extend the 7% decline to retest the September 17 low of $57,610.