Bitcoin has been in a downtrend after reaching a new all-time high in mid-August. This decline stands out against the rise in stocks and gold prices, suggesting a potential future increase in cryptocurrencies.
Prospects for a Surprise Rally
In its latest analysis, crypto analytics platform Santiment highlighted a notable bullish divergence forming between Bitcoin and traditional markets over the past two weeks. Since August 22, BTC has dropped by 5.9%, briefly hitting $107.5K before mild recovery. During this period, the S&P 500 edged up by 0.4% and gold surged by 5.5%.
Since early 2022, crypto assets have shown a strong correlation with equities, making the current split unusual, as Bitcoin has lagged behind both asset classes despite their upward moves. Santiment indicates that sustained divergences often set the stage for Bitcoin and altcoins to 'catch up' with global market trends. The wider the gap grows between BTC and traditional assets, the more compelling the case becomes for a potential crypto rebound.
Conditions for Bitcoin Breakout
In a different analysis, Matrixport stated that Bitcoin's current calm won't last long, highlighting the fragile state of the market as the asset hovers near the $106,000-$108,000 support range. This level has now been tested, confirming the bearish shift in trend models.
However, Matrixport added that such zones rarely give way on the first attempt, and while downside risks remain, the current consolidation could serve as a foundation for the next big move. The context is particularly telling, as evidenced by gold surging to record highs, European bond markets under stress, and US debt issuance accelerating rapidly.
Conclusion and Expectations
At the same time, Bitcoin's funding rates have cooled, and implied volatility has collapsed to historic lows as macro catalysts stack up in September. Options markets appear to be underpricing potential volatility, creating conditions for traders to be caught off guard. Historically, such dips have often set up strong rebounds.
In light of the above, paying attention to Bitcoin's behavior in the upcoming weeks is crucial, as current conditions may indicate a potential recovery after recent declines.
