Bitcoin (BTC) has rallied nearly 47% from its July low. However, Binance Research found that similar rebounds retested their lows in 4 of 5 past cases.
The research ties each outcome to the depth of Bitcoin’s drawdown from its peak. This time, the signal fired 35.6% below the high, inside the group that mostly failed.
Why Does a Shallow Drop Make Bitcoin’s Rebound Fragile?
Binance Research’s weekly report tracked a two-part signal. Bitcoin must close at least 40% above its cycle low and stay 25% or more below its all-time high.
Binance found 7 such signals between 2011 and 2023. In 2 of them, Bitcoin sat 75.5% and 67.1% below its peak, and both rebounds held before reaching new highs.
The other 5 came from shallower drawdowns of 30% to 38%, and 4 retested their lows within 43 days. Only the July 2021 signal held.
“A plausible explanation is that after a deep drawdown, forced selling has likely been largely exhausted, so a 40% rebound is more likely to reflect genuine demand. After a shallower drawdown, fewer holders were pressured to sell, so the rebound carries less information about underlying demand,” the team said.
The current signal triggered on September 3 with Bitcoin 35.6% below its high, placing it in the shallow-drawdown group. Binance Research put the October 1 close at $84,880, 46.9% above the $57,800 low.
Bitcoin’s $60,000 low on February 6 was widely called the bottom, and the price rebounded 38% by May. It later broke that low on June 5 before falling to $57,800.
“The current rebound is a second attempt from a similar position, so the decline to date offers no protection against a retest,” the firm wrote.
However, Binance Research called the results a base rate rather than a forecast.
What Could Decide Bitcoin’s Next Move This Month?
BTC traded at $85,431 at press time, down 0.95% over 24 hours, per BeInCrypto Markets data. Under the framework, the signal holds if Bitcoin sets a new high above $126,200 before breaking below $57,800.
However, Bitcoin must clear a Binance sell wall between $85,000 and $85,500. Glassnode said a move above the wall would confirm that the uptrend is broadening. That break would have to come on rising volume, with exchange-traded fund (ETF) inflows returning.
Meanwhile, spot Bitcoin ETFs drew $2.39 billion in the week before September 28. Over the next 4 sessions, inflows totaled just $51.25 million. That slowdown tests Citi, which raised its 12-month target to $113,000 on an assumed $5 billion in ETF inflows.
US CPI data lands on October 14, and the Fed meets on October 27 and 28. Defunct exchange Mt. Gox also faces an October 31 repayment deadline on 34,387.51 BTC, one of the October risks for Bitcoin
Bitcoin is up 2.23% in the first 6 days of October, CoinGlass data shows. The month has delivered a median 12.73% gain since 2013.
Binance Research said a typical October would support a lasting reset. A weak month would suggest the rebound lacks follow-through.
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