Bitcoin Price Forecast: Possible Decline to $40,000 Before Recovery

Cryptonews John Brightwater September 4, 2024

Bitcoin Price Forecast: Possible Decline to $40,000 Before Recovery

As of the current market analysis, Bitcoin (BTC) has experienced a significant decline, currently valued at $56,500, following a trend of lower lows on a macro scale. This decline occurs in the wake of the Bitcoin halving event, which has not resulted in the expected all-time high. Experts in the field predict a short-term decrease in Bitcoin’s price, projecting a potential drop to between $40,000 and $50,000 before a subsequent recovery phase, which may create a promising buying opportunity for investors.

A report from Bitfinex highlights analysts’ expectations of a 15-20% reduction in Bitcoin’s price coinciding with an anticipated interest rate reduction. The analysts explain that this expectation is grounded in historical trends, which indicate that the peak of each cycle reduces returns by approximately 60-70%, coupled with a diminishing average in bull market corrections.

Furthermore, a 25 basis point interest rate cut could signal the onset of a monetary easing cycle, which has historically been associated with long-term price appreciation. Ryan Lee, the Chief Analyst at Bitget, reinforces this perspective, noting that the forthcoming rate cuts are designed to mitigate potential economic slowdowns instead of responding to an existing financial crisis. This preventive approach is expected to lead to a more tempered market reaction and reduced volatility compared to prior economic downturns, according to Lee.

In analyzing Bitcoin’s immediate potential, the decrease in price seems likely, given the cryptocurrency’s current lack of upward momentum. Analyst Peter Brandt has observed that the coin has recently established a pattern of consistent lower highs and lower lows, which suggest a protracted bearish trend.

Notably, Bitcoin has been forming a right-angled descending broadening wedge pattern over the past five months, typically indicative of bullish reversals; however, confirmation of this bullish potential hinges on a further decline to $55,883. This price point serves as a critical support level, with two possible outcomes: a rebound towards $60,000 or a breach of this support, propelling Bitcoin’s value further towards or below the $40,000 mark, in alignment with Bitfinex’s forecasts.

Nevertheless, the current trading volumes remain subdued, hinting that Bitcoin may potentially bounce back from the $55,883 level. Success in breaching upward beyond $58,986 could put Bitcoin on a trajectory toward reaching $60,000, thereby invalidating bearish expectations. Market participants should continue to monitor these developments closely to position themselves strategically in response to Bitcoin’s anticipated volatility and future price movements.