Bitcoin's Trading Range Extends Beyond 125 Days as September Shows Resilience

• Bitcoin defies the odds with a 22% surge from the month's low, challenging September's bearish reputation.
• All eyes are on the $65,200 mark as bitcoin approaches a pivotal point in its trading channel.
• A 10% price increment analysis reveals bitcoin's potential for unexpected, significant moves.

Bitcoin (BTC) has shown remarkable resilience this September, a typically bearish month, surging 22% from its monthly low of about $52,500. All eyes are now on the critical $65,200 mark, with market participants watching closely to see if it can break out of the current downtrend. Since climbing to a record high back in March, the largest cryptocurrency has been trading in a prolonged downward channel, creating a sense of ennui for many investors.

To gain insights into bitcoin’s trading behavior, consider an analysis using a 10% price increment system. This provides a fairer comparison than using fixed dollar amounts, which can distort analysis as the price increases. By focusing on percentage changes, it's possible to better understand how bitcoin moves relative to its own value, rather than being skewed by absolute price changes.

The analysis reveals that the longest trading range occurred between $8,865 and $9,752, lasting for 155 days. That's not surprising as it coincided with the 2018-2019 market cycle. During this time, bitcoin was consolidating after the post-2017 bull-market peak and before the recovery that started in mid-2019. Notably, this excludes the depths of the bear market from November 2018 to May 2019, when bitcoin was trading below $5,000.

More recently, bitcoin spent 111 days between $54,271 and $59,699. And it has so far spent 126 trading days in its current range of $59,700 to $65,670, a period that could extend if history repeats itself. These prolonged periods of consolidation aren't unprecedented, as seen during the $8,000 to $12,000 range, where bitcoin traded for hundreds of days.

This historical perspective suggests that bitcoin can continue to trade in its current range until the end of October without breaking out, based on past behavior. It’s a stark reminder that bitcoin often moves in extended cycles of consolidation, only to make significant moves when least expected.

As bitcoin approaches critical levels, it’s essential to remain patient and consider these long-term trends. The market’s cyclic nature implies that while this downtrend may seem never-ending, breakouts, when they do come, often bring significant opportunities. Whether or not bitcoin breaks through $65,200 soon, understanding these trading ranges provides invaluable insight into the potential future direction of the market.

Muted drawdowns in the current cycle

These periods of consolidation and reduced volatility can be seen in a positive light. In the current cycle, drawdowns are the most muted compared to previous cycles, with the largest decline being just under 30%. This stability is crucial for new institutional investors, who may be unable to handle extreme volatility swings.

Bitcoin is currently up by less than 1% in the third quarter, with only five trading days remaining. It's been a challenging period for bitcoin, with headwinds such as a sale by the German government and Mt. Gox redemptions. Moreover, the third quarter is typically the weakest for bitcoin, according to Coinglass.

Disclosure: An early draft of this article was edited by an AI tool, then further edited by CoinDesk staff prior to publication.

UPDATE (Sept. 26, 2024, 17:15 UTC): Belatedly adds disclosure.